Jobs, jobs, jobs

To the best of my knowledge, Donald Trump has not yet claimed credit for the yuuuge non-farm labour data released this morning, though others on the right are trying to do that for him.  The US economy added 235,000 jobs in February, above the Wall St consensus for a gain of about 200,000. The numbers may have been boosted by a surge in construction industry hiring, reflecting the early spring in parts of the country, but it's still an impressive showing.  What's more, average hourly earnings, which have been steadily ticking higher for many months, rose 2.8 percent from a year ago,  the unemployment rate edged down to 4.7 percent and the participation rate rose, all clear signs of a tightening labour market.

With these data to hand, a Fed rate hike later this month must now be considered a done deal.  Just how will the White House respond to that?  Trump said during the election campaign that he would fire Fed Chair Janet Yellen, simply on the grounds that she is not a card-carrying Republican.  There have been few signs of a feud between the new administration and the Fed, but it remains to be seen whether there are enough cool heads in the President's inner circle to warn him that ditching Yellen would be a sure-fire way of derailing the economy and the markets.

There was positive jobs news in Canada this morning also, as the economy added 15,000 jobs in February, versus an analysts consensus of a loss of 5,000 jobs. (Is it my imagination, or is the consensus becoming less and less reliable?)  As ever, the details of the report warrant caution, as StatsCan estimates that the economy added 105,000 full-time jobs in the month, offset by a loss of 90,000 part-time positions.  This is a sharp reversal of the pattern seen over the past year and more. Given that job gains were confined to three Provinces that make up just 20 percent of the national population (BC, Saskatchewan and Manitoba), there are reasons aplenty to take today's data with a grain of salt.

All of that said, the employment data for the past several months add to a picture of an economy that is performing more strongly than expected.  Most notably, Canada recorded three straight months of trade surpluses from November to January, with exports reaching a record high.  The data may well translate into revenue gains for the Federal government, making Finance Minister Morneau's task easier as he prepares to deliver his second budget on March 22.  It is widely expected to be a stand-pat document, with the government still not sure what to expect from the Trump administration.  Also standing pat, despite the run of strong data: the Bank of Canada, which remains most unlikely to follow any Fed rate moves over the balance of this year.