The US economy continued to show signs of strength in February, with the addition of 275,000 nonfarm payroll jobs, exceeding expectations. However, the unemployment rate also saw a slight increase to 3.9% from 3.7% in January, marking the first rise in four months. This shift was accompanied by downward revisions to job growth in prior months, showing 167,000 fewer jobs added than previously expected.
Wage growth in February was slower than anticipated, increasing only 0.1% on a monthly basis. This slower growth may ease concerns about inflation resurgence, leading the Federal Reserve to potentially be less worried about the possibility of rising prices. Federal Reserve Chair mentioned that the labor market is “relatively tight” with supply and demand conditions balancing.
While the labor force participation rate remained flat at 62.5%, there was an increase in average weekly hours worked from 34.1 to 34.3. The largest job increases were seen in the healthcare and government sectors. Market analysts are now predicting the possibility of the first Fed rate cut happening in June, with expectations for a total of three to four rate cuts for the year.
Overall, despite the strong job market numbers, the increase in the unemployment rate and downward revisions to previous job growth suggest some softening in the US labor market. The slower wage growth may alleviate concerns about inflation, but the expectation of rate cuts from the Fed in the near future highlights the uncertainty in the economy. Stay tuned for more updates on the evolving US job market on ‘Poh Diaries’.
