NEW YORK (Real Money) -- The market is moving quickly and I'm writing this 10 minutes after the release of the jobs report, but I'll try to keep my comments to what I see as the near-term consequences for traders.
Headline number very strong
As I wrote on Tuesday, I thought a 50,000 additional jobs beat could be a game changer. We got a 54,000 beat, and I'd argue that this indeed should change the whole conversation about how Fed policy might evolve. Not only did we get a strong beat, but the prior figures were revised up by 32,000. The Household Survey, which is used to calculate the unemployment rate, also came in strong at 272,000.
Perhaps even more important than the headline job figure, Average Hourly Earnings, which is probably the most popular measure for wages, grew 0.3% month over month, and 2.3% year over year. Both were 0.1% better than expected. The year-over-year gain of 2.3% ties the highest figure since the Great Recession ended. Worth noting that year-to-date wages have grown by an annualized 3.37%.
Unemployment rate rises
Despite the very strong job gains, unemployment rose by 0.1% due to a large increase in the labor force (397,000 more people). I'm skeptical that this will stick. The Labor Participation Rate has been stuck between 62.7% and 62.9% for the last 14 months, and yet we've had five separate months when the size of the labor force moved by at least 300,000 in a single month. In other words, I think the trend is actually flat, but we're likely to bounce around within that.