Despite the FED's efforts to bring down inflation and slow the economy, nonfarm payrolls rose by 311,000 for the month. This is larger than the expected 225,000, with leisure and hospitality having the largest gain of the sectors. Although it is a drop from the previous month, the unemployment market is still hot. The unemployment rate rose to 3.6 from the expected 3.4, partially due to the increase in labor force participation. The labor force participation is now at 62.5 percent which is the highest it has been since March 2020.
There was also some good news on the inflation side, as average hourly earnings increased 4.6 percent from last year, below the estimate of 4.8 percent. The monthly increase was also 0.2 percent lower than expected.
John Lynch, the chief investment officer at Comerica Wealth Management, said that easing of the wage pressure is the best news to come out of this report. He also said "A drop in the largest costs for businesses is a welcome development. Nonetheless, 50 basis points is still on the table for the March policy meeting, given recent economic strength and dependent on next week's report.
2 comments:
Great post Jaret! With the labor force participation rate being the highest we have seen since March 2020, I would expect the unemployment rate to continue to see a slight rise in upcoming months. Although this is not necessarily a bad thing, the Fed still needs to keep an eye on this.
I think it is interesting to see the labor market still running hot as many tech companies in recent months have began laying off employees. We are also seeing this in some investment banks as well, following the recent collapse of SVB and Credit Suisse. It will be interesting to see where the labor force will be at in the coming months.
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