What's going on?

US stocks rose almost 2% on Friday after the release of economic data showing far more American workers were hired in February than expected � but there was some bad news for those already working�

What does this mean?

First, the good stuff: February saw the biggest monthly increase in US jobs since late 2016. Combined with figures out earlier last week that showed activity in the all-important service sector remained at an extremely buoyant level, there�s clear evidence that the US economic uptick of recent years is continuing apace � which is typically good for companies� profits (and investors).

Why should I care?

For you personally: The bad news for workers is that pay growth slowed.

The rate at which wages increase declined in February after having risen at its fastest pace since 2009 the month before, suggesting that January�s data was a bit too hot. February�s wage and jobs data suggests that, as more new jobs are created, more potential workers are being taken off the sidelines. That�s not great for wage growth: it shows that there are still plenty of people to choose from. But it�s good for jobseekers, and good for the overall economy, partly because it suggests that there�s no shortage of workers to potentially inhibit further economic growth. Eventually, the supply of available workers should tighten so much that wage growth begins to improve.


For markets: Stocks loved it.

Only a month ago, it was January�s fast-rising pay data that appeared to spook investors into aggressively selling bonds � which in turn helped pull down stock prices (click here for the background). As the wage data reversed, it seemingly allayed investors� fears that much higher wages would lead to far higher interest rates � thus endangering stock prices. The rebound has been swift: US stocks are now less than 3% from the record high they hit at the end of January, while European stocks have also recovered, albeit not as much.