- Stuart Hoffman, chief economist at PNC Financial Services Group Inc.
During the whole week nobody expected a stronger-than-expected data from the Bureau of Labor Statistics, as policymakers are economists were constantly blaming weather for the recent weakness in the world's largest economy.
Nevertheless, the U.S. economy managed to add 175,000 new non-farm jobs in February, outpacing analysts' expectations for a 149,000 and rising form January's upwardly revised 129,000. At the same time, the unemployment rate paradoxically jumped to 6.7% from 6.6%, missing analysts' forecasts who predicted the indicator will remain unchanged. Both indicators produce high market volatility in the United States, as economy's ability to create jobs is considered to be a leading indicator of economic spending– largest part of the U.S. economy. Therefore, it was not a surprise that following a release of the data the greenback recovered from its 2-year low against the Euro, while USD/JPY rocketed more than 60 pips. The data confirms that the Fed will stay on its course of monthly tapering, but what is more important, it suggests companies remained upbeat about the economic performance even despite winter storms and freezing temperatures all across the country slowed consumer spending, manufacturing output as well as demand for new property. They also support the Fed's case the economy is in a good shape and will be gathering momentum in the coming months.
© Dukascopy Bank SA