US job creation surged forward in February with a better-than-expected 242,000 positions added compared with consensus estimates of 190,000 according to the Labor Department’s nonfarm payrolls report.

The unemployment rate was unchanged at 4.9% while the labor force participation rate ticked upwards to 62.9%. Despite the impressive number, weakening wage growth meant that investor reaction was somewhat muted. Wage growth is closely watched for signs of inflation that could influence the timing of the next increase in interest rates but February saw average hourly earnings falling 3 cents and taking the annualized rate of wage inflation to 2.2% from last month’s 2.5%.

“Yet again, the majority of jobs were gained in health care, retail and bars/restaurants,” remarked Harry Coolidge, a senior economist at Mizuho Corporate Global. “Yet again, there was a definite bias towards part-time roles.”

Markets reacted cautiously to the report with initial gains pared back once investors had had an opportunity to digest the data. Futures swung between gains and losses while the dollar weakened slightly. Gold fell back initially but bounced back sharply as investors bet that the lack of wage growth would stay the Federal Reserve’s hand on interest rate hikes.

The Fed is looking for economic data that supports its plans to normalize monetary policy but the US economy is sending mixed signals that have created an air of uncertainty which triggered a sharp selloff at the beginning of 2016. Risk appetite appears to have returned but Mizuho Corporate Global says it expects the selling to resume in the coming days and weeks.

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