Topline
Amid waves of layoffs continuing to hit some of the nation’s largest employers, the unemployment rate unexpectedly ticked up last month despite the labor market gaining significantly more jobs than expected—adding to mixed messages about the economy as the Federal Reserve decides whether it should once again ramp up its aggressive campaign to tame rising prices.
Key Facts
Total employment increased by 311,000 in February—significantly more than the 225,000 new jobs economists were expecting, according to data released Friday by the Labor Department.
Following widespread announcements of corporate layoffs last month, the unemployment rate ticked up to 3.6% from 3.4% in January—coming in worse than expectations for it to hold flat at the lowest level since 1969.
Notable job gains occurred in leisure and hospitality, which added 105,000 jobs and has continuously performed well over the past six months, the government said; retail trade and government employment also saw outsized gains.
Despite the unexpected job gains, wages fell short of expectations, with average hourly earnings rising by 8 cents to $33.09, or just 0.2% month to month compared to projections of 0.3% growth.
In an email, Vital Knowledge founder Adam Crisafulli pointed to the lower-than-expected wage growth as a reason the Fed may look past the strong job growth and stick with another quarter-point interest rate hike at its policy meeting this month—a positive sign for investors fearing hot inflation data over the past several weeks may have warranted a more-aggressive half-point hike.
Another welcome sign for the economy and the Fed, the participation rate ticked up to 62.5% (from 62.4% in January)—a sign more Americans are looking for jobs and part of the reason the unemployment rate rose last month.
Crucial Quote
“This jobs report managed a neat trick: Good news for both workers and the Fed,” says Robert Frick, an economist at Navy Federal Credit Union. “For workers, hiring continues to be robust, especially in industries that need people most: leisure and hospitality, retail, government and healthcare… That may blunt the Fed’s ardor for raising rates much more, and so increase the odds of a soft landing.”
Key Background
The labor market forcefully led the post-pandemic economic recovery and has remained strong despite some sectors taking a hit; however, the strength may now be abating. The mixed jobs report comes just one day after the Labor Department reported new jobless claims rose to the highest level of the year last week despite projections they would remain near historically low levels. “It’s no longer accurate to say without reservation that the labor market is a bright spot in the economy,” Glassdoor chief economist Aaron Terrazas said after the Friday jobs report, adding “there are clear pockets of softening” and that some of the most recently announced layoffs are likely not captured in the latest Labor Department data.
Further Reading
2023 Layoff Tracker: Lockheed Martin And Hunter Douglas Reduce Headcounts (Forbes)
Jobless Claims Unexpectedly Rise To 2023 High As Fed Hikes Threaten New Waves Of Layoffs (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2023/03/10/labor-market-added-311000-jobs-in-february-but-unemployment-rate-unexpectedly-rose-to-36/