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Non-Farm Payroll Soars, Wage Growth Causes Concern

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US Dollar Index fell by 0.23% as non-farm payroll rose

The US Dollar Index measures the strength of the US dollar against other major currencies. It fell by 0.23% on March 4, 2016, at 2:00 PM EST after the release of the non-farm payroll data. There was a slight uptick in the dollar towards 98.03 before it fell to 97.36. The rise in the employment data was something that the Market was expecting, especially after the strong ADP employment number on March 2. For more details on the ADP report earlier in the week, read ADP Employment Report Release Strikes a Strong Note.

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Positive side of the employment release

The non-farm payroll report for February, published by the U.S. Bureau of Labor Statistics, didn’t give any major direction to the Market because the numbers were contrasting. On the positive side, the unemployment rate remained at a multiyear low of 4.9%. The non-farm employment change came out at 242,000—compared to forecasts of a 195,000 rise. Healthcare and social assistance added the maximum jobs at 57,000. Among other positive data, the participation rate rose to 62.9%.

Negative side of the employment release

The major negative was the month-over-month average hourly earnings. This represents the percentage change in pay for labor. The earnings were disappointing at -0.1%—compared to forecasts of a 0.2% rise and 0.5% the previous month. The average weekly hours were also below the forecast at 34.4—compared to the forecast of 34.6.

Impact on the market

Looking at market-based ETFS, the SPDR S&P 500 ETF (SPY) and the SPDR S&P MidCap 400 ETF (MDY) rose by 0.33% and 0.69%, respectively. This showed the positive sentiment following the non-farm payroll report.

The PowerShares QQQ Trust Series 1 ETF (QQQ) is a NASDAQ-based ETF. It was comparatively flat with a positive bias of 0.04%. The large-cap equity fund, the iShares Core S&P 500 ETF (IVV) rose by 0.35%. The small-cap fund, the iShares Russell 2000 ETF (IWM) ended the day 0.55% higher.

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