In this morning’s data, the economy added 151,000 jobs in February, just slightly less than expected. The Manufacturing industry was relatively strong, while the Retail Trade industry was relatively weak. Notably, the Government Sector still added jobs in February but at a lower level than the previous month. The Unemployment Rate ticked one tenth higher to 4.1% and the Labor Force Participation Rate at 62.4% is two tenths lower than the previous month. Average Hourly Earnings increased 0.3% in February, as expected, and grew 4.0% on an annual basis. In addition, Average Weekly Hours were 34.1, which is the same as the previous month.
Overall, the economy continued to add jobs in February albeit at a lower level than in previous months, and the unemployment rate ticked slightly higher. Average hourly earnings rose in the month as expected and the annual level remains slightly above the historical average. The drop in the participation rate highlights the trend that the labor market is hanging in there but is softer than it has been.
In recent weeks, layoffs have been announced at some individual companies including Starbucks, Meta, and Chevron to name a few. The federal government is also reviewing laying off workers given their drive for efficiency in the new administration. These workforce reductions have yet to negatively affect the monthly payrolls data, but they may have impacts in the future. Coupling this with the uncertainty of tariff announcements and still elevated inflation measures, the Federal Reserve is likely to remain on hold and cautious with policy adjustments in the coming weeks.
Following the release of the jobs report, the yield on the U.S. 10-year treasury initially ticks higher following the report but is now slightly lower and equity futures are higher as we head into the market open.
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