Instant view: U.S. payrolls better than expected, as markets look to coronavirus impact

U.S. employers maintained a robust pace of hiring in February, giving the economy a strong boost as it confronts the coronavirus outbreak that has stoked financial market fears of a recession and prompted an emergency interest rate cut from the Federal Reserve.

KEY POINTS:

U.S. February employment data for February came in well above expectations, with the U.S. economy creating 273,000 jobs in the month compared to an analyst forecast of 175,000. Market participants remain focused on the risks from a coronavirus outbreak that has accelerated around the world in recent weeks. Stocks, Treasury yields and the dollar all remain solidly lower.

COMMENTS:

MICHAEL ARONE, CHIEF INVESTMENT STRATEGIST, STATE STREET GLOBAL ADVISORS, BOSTON

?If you have a really strong jobs report and there?s no one around to hear it, does it make a noise? Today?s an example that it doesn?t. There are many other things that investors are focused on besides the jobs report this morning.

?Pre-coronavirus the labor market continued to demonstrate strength and that most of the economic data pre-coronavirus signals an economy that was on firm footing. This report would contribute to that idea, whether it?s the top-line number, the revisions, the employment rate or whether it was the broad-based gains we saw across industries. The average (jobs growth) over the last three is much higher than the average for all of 2019. So this report does demonstrate a labor market that was strong and had a very solid foundation prior to the coronavirus.

?That?s what the report tells us, but it doesn?t tell us much about the next few weeks and months from that standpoint. What?s interesting is that this report was cut off in the middle of February before the coronavirus began to spread. But yesterday?s jobless claim report went through the end of February and it still hung in there pretty well. That demonstrates that so far layoffs haven?t picked in response to coronavirus, but again we?re bracing for what the next few weeks and months hold.?

DARRELL CRONK, PRESIDENT, WELLS FARGO INVESTMENT INSTITUTE, AND CHIEF INVESTMENT OFFICER, WEALTH AND INVESTMENT MANAGEMENT AT WELLS FARGO IN NEW YORK

?Markets don?t seem to care. This number is what I would call asymmetrical, there wasn?t a lot of upside opportunity if it came in better than expected, which it did, but if it came in worse than expected than everyone was going to assume the economy was even weaker than anticipated heading into a coronavirus shock. The beat was substantial but this might be one of our last great job number months that we will see for a while because the next one is obviously going to have the impact of probably people pulling in reins for hiring uncertainty.

GREGORY FARANELLO, HEAD OF U.S. RATES, AMERIVET SECURITIES, NEW YORK:

"It's a very good jobs number. This has been the story for the last couple of years. We've had a lot of global uncertainty, at the same time, the U.S. economy has done very well. A lot of the downdraft benefited the U.S. consumer."

"The strong jobs number comes at a time when yields are hitting record lows, and with that, mortgage rates are coming dows. I think it's very stimulative for the economy. I don't feel any panic at all with yields hitting record lows. It's all relative. The 10-year yield right now is a risk proxy. Yields matter but you have to keep it in perspective. They do ultimately benefit the economy."

SCOTT BROWN, CHIEF ECONOMIST AT RAYMOND JAMES IN ST. PETERSBURG, FLORIDA

?Certainly the headline payroll figure was stronger than expected. No real impact from the virus. It is really too soon to see much of an effect of the virus in these numbers yet. But anecdotally, we are seeing significant cutbacks and caution in travel and tourism.?

?It does suggest that the economy was really in a good shape, perhaps a lot stronger than we thought to start the year. Maybe we are able to withstand some of this a little bit better but obviously there is a lot of concern about the virus.?

PETER TUZ, PRESIDENT, CHASE INVESTMENT COUNSEL, CHARLOTTESVILLE, VIRGINIA

?The jobs report was good and I took it positively that we are starting from a strong level facing this coronavirus ... Because you know that it is going to percolate through the economy eventually, probably starting in the travel-related businesses, and then moving up into companies that service travel-related businesses. So we?re bound to see some weakness down the road.?

RUSSELL PRICE, CHIEF ECONOMIST, AMERIPRISE FINANCIAL SERVICES INC, TROY, MICHIGAN

?Today?s report is like the calm before the storm. The construction industry added some nice support to the numbers, both this month and last month, and that was largely reflective of the milder weather we?ve been experiencing this year.

?It?s a reflection of just how strong the economy was before the coronavirus development. So that?s a good sign that there is fundamental support at least for economic prospects once this situation passes.

?It was fairly broad-based, but it was the services industries did very well. Surprisingly, and this is a reflection of how dated this number is relative to what we can expect going forward. Leisure and hospitality was strong, as was education and healthcare. Healthcare will very likely remain very strong, but education and leisure and hospitality in the months ahead will very likely see decline.

DOUG DUNCAN, CHIEF ECONOMIST AT FANNIE MAE, WASHINGTON D.C.

?Hard to find anything to complain about in this report. The upward revisions are surprising and really strong.?

?What this does suggest is that there is strength in the labor market going into the coronavirus. We might not even see layoffs rising in the next report because it is expensive to lay people off and hire them back.?

?We?re not yet seeing any impact yet on leisure and hospitality.?

JJ KINAHAN, CHIEF MARKET STRATEGIST AT TD AMERITRADE IN CHICAGO

?It is nice to know we were in a really solid place before all this started. At the end of the day, it is a good report and bonds did come off significantly since the report. But when you look at the report, the healthcare sector is still doing good ? it?s fantastic. Government hiring always makes me a little nervous because you are never quite sure if that is sustainable. I have to think the 53,000 jobs created in the hospitality industry certainly will not show up again in this month?s report."

"Where jobs were lost - retail was expected. The one that makes me nervous is transportation because if you start losing a lot of jobs there, we know the transportation sector has been suffering pretty significantly. "

"Looking at this report in a vacuum you would think is it is a great report. Looking at this report and saying what has changed over the last two weeks ? great to know where we were, not sure it matters at the moment. You don?t know what you don?t know and clearly the market is very nervous about what we don?t know.?

JOHN DOYLE, VICE PRESIDENT FOR DEALING AND TRADING, TEMPUS INC, WASHINGTON

?The print is very impressive. Anytime the headline reading beats expectations by 100K, it should be the top story of the day. But I think the positivity of the numbers will be drowned out by the overarching risk-off environment today.?

(Compiled by Ira Iosebashvili)