February Jobs Report Highlights: Job Growth Exceeds Expectations, Wages Slow, Fed Likely to Raise Rates

The U.S. economy added 311,000 jobs in February, exceeding expectations and indicating that the labor market remains hot despite the Federal Reserve's efforts to slow the economy and bring down inflation.[0] The unemployment rate rose to 3.6%, while the labor force expanded and monthly wages increased at their slowest rate in twelve months.[1]

Gains in employment in the leisure and hospitality sector were approximately in line with the average of the past six months (91,000), registering an increase of 105,000.[2] Retail saw a gain of 50,000, government added 46,000, and professional and business services saw an increase of 45,000.[3] In the month, there was a decrease of 25,000 jobs in the information sector and a decrease of 22,000 jobs in the transportation and warehousing sector.[4]

Average hourly earnings, a closely watched metric as the Fed seeks to evaluate the impact of rising wages on inflation, grew 0.2% month-on-month and were up 4.6% over the year before, below the estimate for 4.8%.[5] This means the Federal Reserve will likely continue to quickly raise interest rates, which is not happy news for any consumer who is trying to borrow money soon.[6]

The Fed's Open Market Committee will release its next decision on interest rates on March 22.[6] At a Congressional hearing on March 7th, Federal Reserve Chairman Jerome Powell stated that the recent economic data appears to point to a higher than expected level of interest rates.[7]

Meanwhile, the ADP National Employment Report showed that private sector employment increased by 242,000 jobs in February, with the biggest gains in leisure and hospitality making up 34% of the jobs.[8] Annual pay was up 7.2% year-over-year in the private sector.[8]

Following the release, stocks displayed a mixed performance, while Treasury yields were generally lower. Until recently, the Federal Reserve had not had much success in persuading the markets that interest rates would remain elevated over a prolonged period of time.[9] The results of that were far-reaching[9] The yield on Treasury bonds decreased, making borrowing less expensive and aiding in the revitalization of the economy. Since markets are finally heeding the Fed, policymakers may not wish to raise less than what markets are anticipating, as that would mean looser financial conditions.[9]

Overall, the February jobs report shows that the labor market continues to be strong, with job growth continuing to outpace expectations.

0. “Pulling Back the Curtain: Jobs Data Show Signs of Cooling Despite Hot Headline Growth – Ticker Tape” The Ticker Tape, 10 Mar. 2023, https://tickertape.tdameritrade.com/market-news/pulling-back-the-curtain-jobs-data-show-signs-of-cooling-despite-hot-headline-growth-19411

1. “US Jobs Report February 2023: Payrolls Top Estimates, Unemployment Rate Rises” Bloomberg, 10 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-10/us-payrolls-top-estimates-while-jobless-rate-rises-wages-cool

2. “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

3. “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

4. “U.S. jobs report shows 311,000 jobs added as hiring slowed/stayed strong” USA TODAY, 10 Mar. 2023, https://www.usatoday.com/story/money/2023/03/10/jobs-report-today-february/11440745002/

5. “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

6. “February's Jobs Report Brings More Confusing Economic News” TIME, 10 Mar. 2023, https://time.com/6261754/february-jobs-report

7. “Jobs report: US expected to add 225,000 new jobs in February” Yahoo News, 10 Mar. 2023, https://news.yahoo.com/february-jobs-report-march-10-2023-124602371.html

8. “The leisure and hospitality industry is driving US job growth” Quartz, 9 Mar. 2023, https://qz.com/the-leisure-and-hospitality-industry-is-driving-us-job-1850202910

9. “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/

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