February’s non-farm payrolls report showed the US labor market remains resilient amid stubbornly high inflation and aggressive interest rate hikes from the Federal Reserve, with more than 300,000 jobs added last month.
The US economy added 311,000 jobs in February, far exceeding the expected 225,000, but lower than January’s blowout 517,000 reading.
The unemployment rate edged up to 3.6%. Analysts had been expecting the unemployment rate to remain steady at 3.4%.
Notable job gains occurred in leisure and hospitality, retail trade, government, and health care. Employment declined in information and in transportation and warehousing, the US Bureau of Labor Statistics noted.
Average hourly earnings rose to 4.6% in February, up from 4.4% in January, but below the 4.7% expected. On a monthly basis, average hourly earnings grew at a slower pace of 0.2%.
FOREX.com market analyst Fiona Cincotta noted that this jobs report would likely please the Federal Reserve because it showed that job creation remains strong while, at the same time, average hourly earnings are growing at a slower pace.
“The data comes after the Federal Reserve chair earlier this week sounded a hawkish warning that interest rates may need to rise at a faster pace and stay higher for longer,” she said.
“Expectations of a 50 basis point hike slipped to 54% following the release from around 70% mid-week.”
Cincotta continued: “Gains in stocks could be limited as investors continue to assess the fallout from the SVB share sale yesterday, which sent capitalization worries across the sector.”
Quintet Private Bank chief economist and macro strategist Daniele Antonucci added that today's jobs report doesn’t appear consistent with the “totality of the data” the Fed would need to see to justify a 50 basis-point rate increase.
“So, while it’s a close call and it may well be possible that the central banks re-accelerate its rate hiking cycle, this isn’t a done deal,” Antonucci said.
“The unemployment rate ticked up against expectations of a stable reading, and we got slower earnings growth and a drop in hours worked, which are consistent with a slowdown in activity.”
Futures for the three major US indexes were mixed shortly before the market open on Friday, with the Dow Jones falling 0.1%, while the S&P 500 had added 0.2% and the Nasdaq Composite had gained 0.5%.
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