Although employment in the US greatly exceeded market expectations in February, the number of people participating in the labor force increased and the rate of wage growth slowed. When the U.S. employment report for February came out, which was mixed with rising and falling inflation signals, the market put more weight on the fact that the U.S. Federal Reserve (Fed) would choose a baby step (0.25 percentage point) in March.
The U.S. Department of Labor announced on the 10th (local time) that non-farm payrolls added 310,100 jobs in February. This exceeded the market forecast of 225,000. For the 11th month in a row, the number of new jobs in the US has exceeded market expectations, indicating an overheating trend. The unemployment rate was 3.6%, slightly higher than the previous month (3.4%), which was the lowest in 54 years, but is still at the lowest level in 50 years.
New employment was concentrated in the leisure and food and beverage sectors, reflecting the recent overheating of demand in the service sector. 105,000 jobs were created in the leisure and hospitality sector, of which around 70,000 were in the food and beverage service sector. This suggests the inflation of service prices, which the Fed is concerned about.
On the other hand, there were also signs of downward pressure on inflation. The average hourly wage was 0.2% from the previous month, below the market expectation (0.4%) and the lowest since February last year. The 4.6% increase in wages from the previous year was also lower than the market expectation (4.8%).
In particular, the labor force participation rate, which is the ratio of people employed or looking for work among the working age population, was 62.5%, up slightly from the previous month (62.4%), the highest since March 2020. This means that people who left the labor market after the pandemic are returning, suggesting the possibility of overheating and calming down as the job shortage in the US labor market is resolved.
Accordingly, market observations put more weight on baby steps. According to the Chicago Mercantile Exchange’s FedWatch, as of this morning, the possibility of a baby step was predicted to be 59.0% and the possibility of a big step to be 41.0%. Observations in the market are mixed, so it seems that the U.S. Consumer Price Index (CPI), which will be announced on the 14th, will decide whether or not to take a big step.
Right after the employment report came out at 8:30 am on the day, the New York Stock Exchange index futures showed a slight upward trend, but in the aftermath of the Silicon Valley bank bank run, all three major New York Stock Exchange indexes started on a downward trend.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.