• US Non-farm Payroll Employment Rose 275k in February
   
• Revisions to the two prior months were lower, subtracting 167k from the previously reported figures

• Unemployment rate rises to two-year high of 3.9%

• Average hourly earnings increased by 0.1% MoM, 4.3% YoY

• Labor force participation held steady at 62.5%

• Continued normalization should keep fed sidelined

The US economy added 275,000 jobs in February, a sign of continued strength for the jobs market, benefiting workers despite higher interest rates. The headline's strength, however, was offset by large downward revisions in the prior months as January's gain was cut to 229,000 from 353,000 and December's tally was sliced to 290,000 from 333,000. With these revisions, employment in December and January combined is 167,000 lower than previously reported. Hiring over the last three-months (December-February) averaged 265,000 jobs per-month, only slightly lower than the pace of job creation measured over the same time last year (302,000).

Job growth was broad-based last month with the strength in hiring was mostly concentrated in industries either insensitive to cyclical conditions or affected by warmer-than-usual weather. Private payrolls rose by 223k – an uptick from January’s 177k. The service sector added 204k jobs, with gains concentrated in health care & social assistance (+90.7k) and leisure & hospitality (+58k). Job gains across goods producing industries (+19k) were almost entirely concentrated in construction (+23k), while manufacturing (-4k) shed jobs. Other sectors that shed jobs, including nondurable goods (-6k), wholesale trade (-1.2k), and motor vehicles and parts (-0.4k). Government hiring remained robust, adding 52k jobs last month.

The unemployment rate rose to just over a two-year high of 3.9%. The increase was driven by a jump in unemployment and decline in the household measure of employment. Average hourly earnings posted a benign 0.1% increase in the month, a notable deceleration from the downwardly-revised 0.5% reading in January, with the year-over-year rate ticking down to 4.3%.

Source: BIMB Securities Research - 11 Mar 2024