February US Jobs Report: Hot Economy and Rising Unemployment Rate

The US economy added 311,000 jobs in February, the Labor Department said on Friday, continuing a hot hiring streak that has underpinned the country's tight labor market.[0] The unemployment rate went up to 3.6%, higher than what was anticipated at 3.4%, with the labor force participation rate also increasing to 62.5%, its highest since March 2020.

Employment in the leisure and hospitality sector increased by 105,000, which is close to the average of 91,000 for the past six months.[1] Retail experienced an increase of 50,000[2] An additional 46,000 jobs were added by the government, and professional and business services experienced a rise of 45,000.[3]

In February, hourly wages increased by 0.2%, reaching an average of $33.09.[4] This was below expectations of 0.3%, and the annual wage growth of 4.6% undershot 4.7% expectations.[5]

The Federal Reserve has suggested that they may continue to raise interest rates this year, and even at a faster rate, to help get inflation to their 2% target range. This jobs report means that the Federal Reserve will likely continue to quickly raise interest rates, which is not happy news for any consumer who is trying to borrow money soon. The Federal Open Market Committee's next announcement regarding interest rates will be made on March 22nd.[0]

The labor force participation rate rose to 62.5% from 62.4%. This suggests a rise in the supply of labor, which could ease the upwards pressure on wages and maintain a 0.25 percentage point rate increase by the Federal Reserve.[6]

In Canada, the economy added 21,800 jobs in February and the unemployment rate was unchanged at 5%.[7] Survey results from a Bloomberg poll of economists showed that the figures exceeded expectations with a 10,000 job increase and an unemployment rate of 5.1%.[7] The average workweek ticked down to 34.5 hours from a revised 34.6 hours, signaling a “significant overall drop” in labor demand.[5] The sectors of information, transportation and warehousing, and manufacturing all saw decreases in the number of jobs in the month. Information experienced the largest decline, with 25,000 lost positions (-0.8%), followed by transportation and warehousing, which had 21,500 fewer jobs (0.3%), and manufacturing, which saw a decrease of 4,000 positions.[8]

Overall, the February jobs report shows that the US economy is still hot, with the unemployment rate rising slightly above expectations.

0. “February's Jobs Report Brings More Confusing Economic News” TIME, 10 Mar. 2023, https://time.com/6261754/february-jobs-report

1. “Strong February Jobs Report Leaves Fed on Track for More Rate Hikes” Morningstar, 10 Mar. 2023, https://www.morningstar.com/articles/1143511/strong-february-jobs-report-leaves-fed-on-track-for-more-rate-hikes

2. “Payrolls rose 311,000 in February, more than expected, showing solid growth” CNBC, 10 Mar. 2023, https://www.cnbc.com/2023/03/10/jobs-report-february-2023.html

3. “US hiring boom continued in February with 311,000 added jobs” The Guardian, 10 Mar. 2023, https://www.theguardian.com/business/2023/mar/10/us-jobs-report-february-2023

4. “February jobs report: U.S. economy added 311,000 jobs” Axios, 10 Mar. 2023, https://www.axios.com/2023/03/10/us-february-jobs-report-2023

5. “Jobs Report: Soft Wage Growth Offsets Strong Hiring” Investor's Business Daily, 10 Mar. 2023, https://www.investors.com/news/economy/jobs-report-soft-wage-growth-offsets-strong-hiring-sp-500-futures-rise/

6. “Jobs report: Economists split on Fed's next move after strong February jobs report” Yahoo News, 10 Mar. 2023, https://news.yahoo.com/jobs-report-economists-split-on-feds-next-move-after-strong-february-jobs-report-192035548.html

7. “Canada Labor Market: Jobs Gain Doubles Expectations, Testing Interest Rate Pause” Bloomberg, 10 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-10/canada-s-jobs-market-doubles-expectations-testing-rate-pause

8. “Job growth spikes push Fed toward more aggressive interest rate hikes” Fox Business, 10 Mar. 2023, https://www.foxbusiness.com/personal-finance/job-growth-march-2023-fed-rate-hike

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