What's going on?

In the latest bit of relatively positive economic data, Friday�s US jobs report showed that many more workers were hired in February than expected.

What does this mean?

It�s another piece of evidence that the US economy is doing better than investors had feared just a few weeks ago – that�s good of course. But wage growth actually declined in February and that�s probably because there are a lot more people without jobs than the headline 4.9% unemployment rate suggests. Weirdly, that rate only includes people that both a) don�t have a job and b) are actively trying to find a job. It doesn�t count people that have given up looking for work. But as more jobs are created, those �forgotten unemployed� come off the sidelines and enter the workforce. There are still so many of them available that companies aren�t having to increase wages a lot in order to find new workers.

Why should I care?

For markets: It�s being called a �Goldilocks number.� If the data was really strong, it would make the US Federal Reserve (the �Fed�) more likely to increase interest rates. Really bad data would suggest that the economy might be worse than people think. But this number was �just right� � strong enough to suggest the economy is doing ok, but not so strong that the Fed becomes meaningfully more likely to raise interest rates as a result of it. Remember that raising interest rates creates somewhat of a headwind for the economy by making it more expensive for people and businesses to borrow (and then spend) money � so the Fed wants a fairly strong economy before it raises interest rates again.

For you personally: Wage growth is extremely important � and not just for you personally. The overall economy wants you to get paid more too: so you go out and spend your increased pay on doing and buying stuff. And that�s why the Fed is likely watching the data on wage growth closely � it doesn�t want to stifle wage growth �because that would hurt the economy too much (remember, the economy is very dependent on the consumer, e.g. you, spending money).