In this morning’s data, the economy added 311,000 jobs in February, again higher than expected. The Leisure and Hospitality industry was relatively strong, adding 105,000 jobs, while the Manufacturing industry was relatively weak. The Unemployment Rate increased two-tenths to 3.6% and the Labor Force Participation Rate at 62.5% is one-tenth higher than the previous month. Average Hourly Earnings increased 0.2% in February, slightly less than expected, and is now 4.6% higher on an annual basis. In addition, Average Weekly Hours were 34.5, which is two-tenths lower than the previous month.
Overall, another decent jobs report with an increase in headline payrolls and a continued low unemployment rate despite a tick upward in February. The labor market remains resilient. Average hourly earnings did come in less than expected in February, but the 4.6% annual increase is higher than the previous month and is a reminder that inflationary measures have briefly paused their downward trend. Given these data, the Federal Reserve is likely to keep monetary policy tighter for longer, including higher rates and continuing to reduce their balance sheet, to ensure inflation moves lower toward their target. How long the unemployment rate, the consumer, and the economy can hold up amidst these conditions will be closely watched in the weeks ahead.
Following the release of the jobs report, the U.S. 10-year treasury yield initially ticked lower but is now little changed from when the report was released and equity futures are higher as we head into the market open.
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