U.S. Economy Adds 311,000 Jobs in February – Will Consumer Price Index Reveal Inflation Data?

The U.S. economy added 311,000 jobs in February, according to data released Friday by the Labor Department.[0] This exceeded expectations of 205,000 jobs and continues a hot hiring streak that has underpinned the tight labor market.[0] The unemployment rate increased to 3.6%, surpassing the estimate of 3.4%, while the labor force participation rate rose slightly to 62.5%, the highest it has been since March 2020.[1] Average hourly earnings increased by 0.24%, lighter than the 0.4% increase predicted by economists.

Leisure and hospitality led the way in payroll gains, with job growth of 105,000, while retail saw a gain of 50,000 and government added 46,000.[2] The rate of increase for wages was 0.2% in the month, the lowest it has been since February 2022. The month saw a decrease of 25,000 jobs in the information sector, and 22,000 jobs in transportation and warehousing were lost.[3]

The report comes less than two weeks before the Federal Reserve's next policy meeting, with investors bracing for a more aggressive 0.50% rate hike after Fed Chair Jay Powell told lawmakers this week “the ultimate level of interest rates is likely to be higher than previously anticipated”.[4] Towards the end of 2022, when inflation data appeared to become more subdued, markets anticipated the Federal Reserve to reduce the frequency of its rate increases.[5] In February, the Federal Open Market Committee approved a 0.25 percent raise, indicating that future hikes would be smaller.[5] Following the report, the yield on the 10-year Treasury dropped by a margin of over 14 basis points to 3.779%.[6]

The focus now shifts to the upcoming Consumer Price Index report in the upcoming week, which may give further insight into inflation and may be the determining factor on whether or not the Federal Reserve increases the rate by 0.25 or 0.50 points in 12 days.[7] Analysts and strategists were closely observing wage growth ahead of Friday's report. Average hourly earnings increased by 4.6% from the prior year in February, a rise from the 4.4% jump in January yet slightly less than the expected 4.7% year-on-year growth in wages.[1]

This narrative is in progress and will be revised.[8] This Friday, the February jobs report will be closely watched following January's unexpected jump in hiring that left economists perplexed and heightened fears about inflation.[9]

0. “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

1. “Jobs report: US economy adds 311,000 jobs in February as labor market stays strong” Yahoo Money, 10 Mar. 2023, https://money.yahoo.com/february-jobs-report-march-10-2023-124602371.html

2. “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

3. “Another strong jobs report complicates the inflation outlook” The Boston Globe, 10 Mar. 2023, https://www.bostonglobe.com/2023/03/10/business/another-strong-jobs-report-complicates-inflation-outlook/

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

5. “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

6. “S&P 500 falls as Silicon Valley Bank woes hit banking shares: Live updates: Live updates” CNBC, 10 Mar. 2023, https://www.cnbc.com/2023/03/09/stock-market-today-live-updates.html

7. “Jobs added in February slow from January, still stronger than consensus: nonfarm payrolls” Seeking Alpha, 10 Mar. 2023, https://seekingalpha.com/news/3946444-jobs-added-in-february-slow-from-january-still-stronger-than-expected-nonfarm-payrolls

8. “The US economy added 311,000 jobs in February, outpacing expectations” CNN, 10 Mar. 2023, https://www.cnn.com/2023/03/10/economy/february-jobs-report-final/index.html

9. “Friday's Jobs Report Is In. What It Means for the Fed.” Barron's, 10 Mar. 2023, https://www.barrons.com/articles/february-jobs-report-today-39762ac

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