Mohamed El-Erian, dean of Queen's College at Cambridge University, said investors viewed the US non-farm payrolls report as “good news,” although mixed employment data did not provide much reliable signal for policy makers.
“The bottom line for policymakers and most economists is that we're going to think this doesn't include much new information,” El-Erian said. But the current mentality of investors is “good news is good news; bad news is also good news,” he said.
Friday's report showed that the US unemployment rate climbed to a two-year high in February, and wage growth slowed, but the number of employed people continued to grow steadily, indicating that the labor market has cooled down but is still resilient. After the report was released, the swap agreement fully showed that the Federal Reserve cut interest rates by 25 basis points until June.
“This is a vague report” and “people will see what they want to see in this report,” said El-Erian, a Bloomberg columnist and former CEO of Pacific Investment Management. “Economists tell you that the situation is unclear, and the market thinks the situation is very good, and the gap between the two is even wider.”
According to a report released by the US Bureau of Labor Statistics on Friday, the number of non-farm payrolls increased by 275,000 in February, compared to a total of 167,000 in the previous two months. The unemployment rate rose to 3.9%.
El-Erian said the report showed that the US is still outperforming most other major economies. He pointed out that Germany, the United Kingdom, and Japan have all fallen into a technical recession, while the Chinese economy is struggling
The message was: “American economic exceptionalism,” he said. “America is an exception.”