Friday saw the release of the Labor Department's closely watched monthly employment snapshot, which showed the US economy had added 311,000 jobs in February. This figure was well above expectations, with economists having forecast 205,000 jobs to be added in the month. The unemployment rate increased to 3.6%, which was higher than the predicted 3.4%, accompanied by an increase in the labor force participation rate to 62.5%, the highest it has been since March 2020.
Major industries saw an increase in payroll of 105,000, with the leisure and hospitality sector leading the way. Retail saw a gain of 50,000, while government added 46,000 and professional and business services saw an increase of 45,000. Average hourly earnings rose 0.2% month-on-month and were up 4.6% over the year before, below the expectation for 4.8%.
The Federal Reserve is paying close attention to the jobs report for February that will be released on Friday as it decides what to do about rates; based on Chair Jerome Powell's statements to Congress this week, many futures traders are now forecasting a rate hike of a half-percentage point. This is because Powell indicated that a very strong job market, along with robust consumer spending and stubbornly high inflation, could prompt the central bank to raise interest rates higher – and more rapidly – than had been expected late last year.
Despite the Federal Reserve attempting to bring the economy to a slower pace and reduce inflation, job creation in February was still higher than anticipated, even though it had decreased from the previous month. After the announcement, stocks saw a mixed performance, while Treasury yields mostly declined. Analysts anticipate that the economy created 205,000 jobs in the past month, yet they are also anticipating whether January's impressive 517,000 figure will be adjusted.
The report likely keeps the Fed on track on raise interest rates when it meets again March 21-22. CME Group's estimate puts the chance of the central bank increasing by 0.5 percentage points at 48.4%, which is roughly equivalent to a coin flip. However, traders are indicating that this is less likely to occur.
Overall, Friday’s jobs report showed that while job creation decelerated in February, it was still above expectations and indicating that the US labor market is still hot. The report likely keeps the Fed on track to raise interest rates when it meets again March 21-22, but traders have priced in less of a chance that the central bank will accelerate to a 0.5 percentage point increase.
0. “The US economy added 311,000 jobs in February, outpacing expectations” CNN, 10 Mar. 2023, https://www.cnn.com/2023/03/10/economy/february-jobs-report-final/index.html
1. “The job market slowed last month, but it's still too hot to ease inflation fears” NPR, 10 Mar. 2023, https://www.npr.org/2023/03/10/1162054252/jobs-workers-labor-market-inflation-federal-reserve
2. “Gold price gains as U.S. jobs number beats expectations in February, but unemployment rate climbs” Kitco NEWS, 10 Mar. 2023, https://www.kitco.com/news/2023-03-10/Gold-price-gains-as-U-S-jobs-report-beats-expectations-in-February-but-January-number-revised-down.html
3. “The US added 311,000 jobs in February, unemployment rate at 3.6%” Business Insider, 10 Mar. 2023, https://www.businessinsider.com/job-growth-unemployment-rate-recession-outlook-february-jobs-report-2023-3
4. “Payrolls rose 311,000 in February, more than expected, showing solid growth” CNBC, 10 Mar. 2023, https://www.cnbc.com/2023/03/10/jobs-report-february-2023.html
5. “US hiring boom continued in February with 311,000 added jobs” The Guardian, 10 Mar. 2023, https://www.theguardian.com/business/2023/mar/10/us-jobs-report-february-2023
6. “Jobless claims, Oracle earnings, Ulta Beauty: 3 things to watch” Yahoo Life, 8 Mar. 2023, https://www.yahoo.com/lifestyle/jobless-claims-oracle-earnings-ulta-161115523.html
7. “Jobs Report Comes in Hotter-than-Expected” TipRanks, 10 Mar. 2023, https://www.tipranks.com/news/jobs-report-comes-in-hotter-than-expected
8. “Why Friday's Jobs Report Won't Save The S&P 500 From Fed Hawks” Investor's Business Daily, 9 Mar. 2023, https://www.investors.com/news/economy/why-a-soft-jobs-report-wont-save-the-sp-500-from-fed-hawks/
9. “Nonfarm Payrolls rise by 311,000 in February vs. 205,000 expected” FXStreet, 10 Mar. 2023, https://www.fxstreet.com/news/us-nonfarm-payrolls-forecast-analyzing-february-nfp-release-202303100700