With 235,000 new jobs created according to the U.S. Labor Department, and 298,000 created according to ADP, February was a booming month for new jobs.
But the employment news could be too rosy for the Federal Reserve, which will be compelled to once again raise interest rates in an effort to keep inflation in check and rein in a fast-moving economy.
"Friday's jobs number is the best we've seen in ten years," notes Dan Celia, financial expert and nationally syndicated television and radio host based in Philadelphia, Pa. "That's not necessarily because of the 235,000 new jobs-after all, we are still at a late 1970s labor participation rat. But the best news of all is that 300,000 people re-entered the workforce, yet the unemployment rate decreased. It means that these 300,000 actually got jobs, and that is the best news story from these numbers."
Celia adds that although the labor participation rate is still stuck in the late '70s, his hope is that numbers will soon compare to 1980. "That's when the average annual labor participation rate was 64," he points out. "Currently, it sits at a full point lower."
Others say the jobs number is a much-needed shot in the arm for a U.S. economy that was already gaining speed.
"The jobs number indicates that the current state of the American economy is improving," says Paul Koger, a stock trader and founder of the trading website FoxyTrades.com. "This will likely increase the odds of a rate hike by the Federal Reserve, who are closely monitoring the health of the US economy with an aim to increase the interest rate. Higher interest rates will negatively affect the stock prices as borrowing money will become slightly harder."
"The jobs market flashed a 'bright green signal' to the Fed," says Bodhi Ganguli, lead economist at Dun & Bradstreet, Country Risk Services team.
"The headline payroll number of 235,000 was better than most had expected, and more importantly, signaled continued strength in hiring consistent with the strong fundamentals of the US economy," states Ganguli. "Job gains were more than able to absorb new entrants into the labor force; hence the unemployment rate fell, while labor force participation rose. Finally, wage growth accelerated from last month, adding further momentum to the upward trend in US inflation."
Ganguli says his firm's baseline forecast calls for three rate hikes this year, the first of which will be this week. "A fiscal stimulus package from the government could add to the growth momentum and prompt the Fed to add a fourth rate hike in 2017, but we're not there yet."
As for any impact on the stock market, the general consensus was the jobs report was not much of a surprise, with a few micro-factors that still seek improvement. (Since the jobs report on March 10, the Dow Jones Industrial Average has remained stable, hovering around the 20,800 mark.)
"The jobs report was strong and has been showing a strong trend for a number of years," notes Mark Painter, founder of Everguide Financial Group, in Berkeley Heights, N.J. "In fact, we're reaching full employment so it will be difficult to get much stronger from here."
The issue with the report was in wages which have not kept up with the tightness in the job market, Painter states. "The market is pricing in a pretty significant increase in relation to incomes and the economy already, so wages need to catch up with the headline number," he says.
Consequently, one month into a Trump presidency, and it's "so far, so good" on the economy and markets, even with a more aggressive Federal Reserve in play.
"Any negative effect from the interest rate hikes will be outweighed by the improving state of the US economy," says Kroger. "For the average investor, the jobs number should inject security that the US economy is becoming stronger and sooner or later the stock prices will follow."