Goldman Sachs: Non-farm Payroll Report Signals Faster Rate Hikes
February’s non-farm payroll
February’s non-farm payroll report indicated a solid improvement in the US jobs market. The non-farm payrolls for February stood at 313,000 as compared to 200,000 in January 2018, according to the report provided by the US Bureau of Labor Statistics. It beat the market expectation of 200,000. It was the highest rise in the jobs market since July 2016.
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The higher rise in the jobs market is signaling that the economy is gradually reaching full employment capacity and the unemployment rate in the United States is gradually falling.
Non-farm payroll’s impact on the market
After the announcement of the non-farm payroll report on Friday, March 9, 2018, major ETFs such as the SPDR S&P 500 Index (SPY), the SPDR Dow Jones Industrial Average ETF (DIA), and the PowerShares QQQ ETF (QQQ), which track the performance of the S&P 500 Index, the Dow Jones Industrial Average Index, and the NASDAQ Composite Index reversed their directions and entered positive territory. These ETFs rose 1.7%, 1.8%, and 1.9%, respectively, on that day.
Goldman Sachs’s view on the rate hike
Goldman Sachs’s (GS) chief US equity strategist David Kostin recently said in an interview with CNBC that the non-farm payroll figures are indicating that we might see a faster rate hike process in 2018. However, a faster rate hike process may slow the economic activity, as it will make borrowing more costly.
You may be interested to read, Is Stronger Non-Farm Payroll Reducing Fear of a Market Sell-Off?