Friday’s slew of key U.S. economic data came in below consensus forecasts on all accounts. The key Non-Farm Employment Change saw 151,000 new jobs added as opposed to the expectation of 180,000, whilst the Unemployment Rate remained unchanged at 4.9% but had been expected to fall slightly to 4.8%. Average Hourly Earnings increased by 0.1% but had been expected to increase by 0.2%.
In spite of the disappointing numbers, the U.S. Dollar Index initially fell by 0.4% but quickly recovered to actually close the day practically unchanged. The rise was strongest against the Japanese Yen by 0.53%, although the greenback fell significantly against precious metals following the announcement, closing down against Gold by 1.22%. The S&P 500 Index of U.S. stocks rose by 0.55% on the day following the announcements.
Overall, it seems the market largely shrugged off the poor numbers, which may bode well for the U.S. dollar and the U.S. stock market in general. With U.S. markets remaining closed over Monday’s Labor Day holiday, Tuesday’s trading will show the direction of the longer-term digestion of the news.
Positive Spin?
Some economic commentators have suggested that the market may instead be looking to the fact that the long run of fairly strong net positive job creation has continued for yet another month. Net new jobs have been added every month since early 2010.
Another take on the market reaction is that while these numbers are widely seen as insufficient to justify a rate hike later this month by the Federal Reserve, the market was never really expecting such a rate hike anyway, so no real change to expectations concerning monetary policy has occurred.