Jobs Data Disappointing, though Unemployment Rate Falls

The US employment data was in line with expectations, but this is disappointing in that it suggests that there has been no acceleration of private sector job growth from Q4 10. The 222k rise in price sector jobs was a bit more than expected and the upward revision to the Jan data keeps the monthly average around 140k. Manufacturing jobs grew by 33k, better than the 25k the consensus expected and the Jan data was also revised up a little. This bodes well for the manufacturing output figures due out later in March.

Yet the flat hourly earnings figure is disappointing and suggests limited gains in income. Auto sales point to good retail sales report, but consumption may have to have been fueled by dipping into savings more than wage and salary income. The work also did not bounce back from last Jan's weather induced weakness and this is also disappointing. The continued decline in the unemployment rate to 8.9% is surprising, but does not appear to be reflecting underlying jobs growth as much as changes in the participation rate.