KEY POINTS:
- US Nonfarm Payrolls: 311K (Forecast: 225K, Previous: 517K)
- US Unemployment Rate: 3.6% (Forecast: 3.4%, Previous: 3.4%)
- Biggest gains: Leisure and hospitality industry (+105K jobs in February)
- Biggest loss: Transportation and warehousing industry (-20K jobs in February)
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According to the U.S. Bureau of Labor Statistics (BLS), the total nonfarm payroll employment rose by 311,000 in February, indicating a job market that was hotter than expected (forecasts were just 225K). Still this is significantly lower than January’s job growth of 517K. This comes after a March 9th report which indicated an increase in the weekly jobless claims, and the overall unemployment rate reflects that — it edged up to 3.6% from 3.4%.
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Notable job gains occurred in leisure and hospitality, retail trade, government, and healthcare. Notable job losses occurred in information and transportation and warehousing.
The leisure and hospitality industry added 105,000 jobs in February, marking a similar trend to the average monthly gain of 91,000 over the prior six months. Moreover, food services and drinking places added 70,000 jobs in February, and employment continued to trend up in accommodation (+14,000). Employment in leisure and hospitality remains below its pre-pandemic February 2020 level by 410,000, or 2.4%.
The retail trade industry also experienced a positive trend as employment in this industry rose by 50,000 in February, reflecting a gain in general merchandise retailers (+39,000). Employment in retail trade remained little changed over the year.
The government employment sector increased by 46,000 jobs in February, about the same as the average monthly gain of 44,000 over the prior six months. Employment in local government continued to trend up in February (+37,000). However, employment in government is below its pre-pandemic February 2020 level by 376,000, or 1.6%.
Employment in the professional and business services sector changed little over the month, with an increase of 42,000. However, the industry has added 615,000 jobs over the past year.
In contrast, employment in the transportation and warehousing industry declined by 20,000 in February, marking a significant loss after a positive trend over the past months.
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The unemployment rate was felt most by Hispanic-Americans, where the rate increased to 5.3% in February, while the unemployment rate for most other demographics remained largely the same. The number of unemployed persons rose to 5.9 million, up from the previous month. The number of job losers and persons who completed temporary jobs also increased by 223,000 to 2.8 million.
Layoffs rose as more workers re-entered the workforce. The jobless rate is still near its lowest level in over 50 years. The average hourly earnings rose 0.2% in February, while the labor force participation rate increased to 62.5% from 62.4% in January. The number of persons employed part-time for economic reasons, at 4.1 million, was essentially unchanged in February.
What The Job Report Means
The rise in unemployment is a highly welcomed event in a world where bad news is good news, and inflation is running hot. An unemployment rate of 3.6% (above expectations) means Fed Chair Jerome Powell is now just 0.4% away from the Fed’s ideal unemployment rate of 4%.
This also means that the current rate hikes put in place are working effectively. However, the continued hotter-than-expected rise in nonfarm payrolls may still cause Powell and the Fed to raise an eyebrow — especially if next week’s CPI shows continued inflationary pressure.
