Weather, wages and what's next
Amherst-Pierpont notes that three-month annualized wage growth was just 1.6% and said that although the Feb jobs report was strong, it wasn't a blowout. They anticipate ultimately "a marked pickup in wage gains, but not in February... It is really the wage figure that keeps this report from being another game-changer."
Credit Suisse analysts note that weather appears to have had no visible impact on the February jobs data; illustrated by construction jobs rising 29K. They also note the Household Survey "not at work due to weather" series was 329K, basically in line with its February long-term average of 340K. "Unambiguous strength in US job creation and the continued decline in the unemployment rate argues in favor of the FOMC dropping the word "patient" from its forward guidance in March. We believe the FOMC will be confident enough in its outlook for (eventual) accelerating inflation to start tightening as soon as June, but we concede the risks to our forecast are skewed to a slightly later start given weak wages and inflation data."
Adrian Owens, a currency fund manager at Swiss investment firm GAM who manages just over $3 billion in assets. "A move down to parity in the euro against the dollar looks realistic. The only question is whether we get there in three to four months or whether it takes 18 months."
TD: "Output in Q1 is looking to be weaker than expected as GDP is shaping up around 2.0%. With output on the low side the strong job growth and hours worked point to weak productivity growth."
Dan Greenhaus, chief market strategist at BTIG: "While some find fault with the Fed pushing for tighter policy with lackluster inflation and wage data, the fact remains that they are doing exactly that. Today's report is entirely in step with recent trends and, with the unemployment rate now at the top end of longer run estimates, the Fed will almost surely move to drop "patient" at its upcoming meeting while pushing towards raising interest rates later this year."
Tom Porcelli, chief US economist at RBC: "It's been looking extremely constructive over the past few months, at the very least it probably gives some people pause for cutting down their GDP expectations this year... We had already generated a million jobs in the previous three months, the economy is generating more job growth than we think it has the ability to do. While the summers have been very robust, at some point we'll have to see the slowdown to some extent. You either have to have job growth down shift to the growth rate we've been witnessing, at 2 percent to 2.5 percent, or you need to see economic activity ramp up to 3 percent, which is what 300,000 jobs would be more consistent with."
