The February jobs report had something for everyone: encouraging developments for American workers and the Federal Reserve's inflation-fighting efforts.
Economists and data-watchers hoped the latest payrolls report would clear up the big question of the moment: Will more hot data force the Fed to tighten more aggressively?
- The report doesn't settle the question one way or the other. Some details point to a job market still bursting at the seams, alongside others that suggest inflationary pressures are diminishing.
January's fiery-hot jobs report showed that employers have an insatiable appetite for more staff. That's still the case — a welcome development for job-seekers.
- Last month, employers continued to add staff at a rapid rate, with 311,000 overall positions. And revisions did not dramatically alter the picture for January or December.
Meanwhile, a surge of workers (roughly 270,000) re-entered the labor force last month, helping push up the unemployment rate slightly to 3.6%.
- Notably, the labor force participation rate for prime-age workers (those between 25 and 54) is back at its pre-pandemic level of 83.1%.
- That more workers are returning to the job market is good news, because it could help bring the labor market back into balance in a less painful manner. Employer demand for workers does not have to come down as much if more workers are available to meet said demand.
Wages are especially crucial for the inflation outlook, and there the news looks favorable. Average hourly earnings were up only 0.2% last month.
- Over the last three months, they've risen at a 3.6% annual rate, down from 4.9% in the final months of last year. Slower wage growth should diminish price pressures.
"If you have a labor market that is showing less tightness on the labor force participation front, that will tend — all else equal — to put downward pressure on wage growth," Gregory Daco, chief economist at EY-Parthenon, tells Axios.
More job reports like the one in February could mean a more gradual labor market cooling that would be less painful for American workers.
- Attention now turns to next week's Consumer Price Index report, which may hold more clues about inflationary pressures and could be the deciding factor on whether the Fed hikes by a quarter-point or half-point in 12 days.
Here's one thing you might have missed in this morning's crowd-pleasing jobs report: Americans spent even less time in spells of unemployment.
The labor market is still hot and employers are hiring at a robust pace. That means laid-off workers have plentiful opportunities to find new gigs.
The median duration that workers spent unemployed dropped to 8.3 weeks last month. For context, before the pandemic hit in January 2020, the number was 9.6.
Reports continue to trickle out about layoffs in hard-hit areas of the economy, including technology.
- But the February jobs report is further confirmation that, in most other sectors, employers still have a lot of demand for staff.