Change in nonfarm payrolls came in at +165k (140k expected), the change in private payrolls was 176k (150k expected) and the change in manufacturing payrolls was 0k (5k expected). The unemployment rate ticked down to 7.5% while average weekly hours worked fell to 34.4 and the underemployment rate increased to 13.9%.
The biggest news of the week by far, came in today as NFP beat expectations and revisions to prior months show a healthier trend than originally thought. A few positive takeaways: unemployment dropped this month for the right reason (i.e. not because the labor market participation rate fell) and private payrolls have increased better than expected the past several months. The market response to the news was a bear steepener. Ten-year notes are down 22 tics to 1.70% but are finding some support there on short covering. Its important to keep a long term view after this number. While it is a positive sign, it still is just a single observation and the next number will be muddled by the sequester. There are certainly still some red flags in the report. For instance, the underemployment rate increased to 13.9% (more people settling for part time jobs) and average weekly hours fell to 34.4. Enjoy the weekend.
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