According to payroll processor, ADP, the private sector added 235K jobs in February, beating expectations of 200K. February marks the 4th consecutive month where payrolls exceeded 200K new additions.
“The job market is red hot and threatens to overheat,” stated Mark Zandi, chief economist of Moody Analytics. “With government spending increases and tax cuts, growth is set to accelerate.”
Economists raise concerns over a hot job market as pressure builds among employers to find qualified workers. With macro implications top of mind, they fear wage increases will follow suit. While great news from an employee perspective, a bump in wages could potentially lead to a spike in inflation and push the Feds down the path of considering another rate hike in 2018.
Bumping rates faster than anticipated could rattle the markets once again. The major indices would likely feel the brunt of it as investors shift their portfolios back to the bonds markets. February’s wild ride, when the DOW saw a brief correction of over 12% on news that hourly wages rose at the quickest pace in 8 years, could be a prelude on what’s to come should inflation concerns continue.
Jobless claims are at lowest levels in nearly 50 years & the unemployment rate is hovering around a 17 year low of 4.1%.
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