US Economy Adds 311,000 Jobs as Unemployment Rate Rises to 3.6%
The US economy added 311,000 jobs in February, exceeding economists’ expectations of 225,000, according to a report from the Labor Department released Friday. The unemployment rate unexpectedly increased to 3.6%, while the labor force participation rate rose to its highest level since March 2020 at 62.5%. This was higher than the expected 3.4%.
Monthly average hourly earnings rose by 0.2%, and this was an increase of 4.6% from the same period a year ago. This statistic is highly monitored by the Federal Reserve as they examine the effects of wage growth on inflation. This was below the estimate for 4.8%, providing some good news on the inflation side.
Of the major industries, leisure and hospitality took the lead in payroll increases, resulting in an increase of 105,000 jobs. In February, two major industries – information and transportation/warehousing – experienced a decrease. Employers had to work their employees a bit less intensely to meet demand, as the average workweek decreased from 34.6 to 34.5 hours.
The data showed that growth in jobs is slowing, but likely not at a pace that will satisfy the Federal Reserve. Given that the Fed raised interest rates for a majority of 2019 while keeping a close eye on the labor market, these new figures may prompt them to accelerate their rate hikes. At their next meeting on March 21-22, the Federal Reserve will make a decision regarding interest rate changes.
John Lynch, chief investment officer at Comerica Wealth Management, said “perhaps the best news from this report was the easing of wage pressures. 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 [consumer price index] report.”
Overall, the jobs report underlines the strength of the US labor market, despite the Federal Reserve’s efforts to slow the economy and bring down inflation. The rise in the labor force participation rate is a positive sign, as well as the moderation in wages, which suggests that inflationary pressures may not be as intense as previously thought. The market will now be eyeing the Fed's next meeting for more clarity on their future rate hikes.
0. “Economy adds 311K jobs in February, unemployment rises to 3.6 percent” The Hill, 10 Mar. 2023, https://thehill.com/business/economy/3893074-jobs-report-economy-inflation-labor-unemployment
1. “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
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. “The US added 311,000 jobs in February, unemployment rate at 3.6%” Business Insider, 10 Mar. 2023, https://www.businessinsider.com/job-growth-unemployment-rate-recession-outlook-february-jobs-report-2023-3
4. “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/
5. “US jobs growth remains strong despite rate rises” BBC, 10 Mar. 2023, https://www.bbc.com/news/business-64917664
6. “Lopsided job-to-worker ratio continues; Michigan talent agency blames mismatched expectations” MLive.com, 10 Mar. 2023, https://www.mlive.com/public-interest/2023/03/lopsided-job-to-worker-ratio-continues-michigan-talent-agency-says-its-a-mismatch-of-expectations.html
7. “After the US added 300,000 jobs in February, the Fed will likely raise rates faster” Yahoo Entertainment, 10 Mar. 2023, https://www.yahoo.com/entertainment/us-added-300-000-jobs-135000785.html
8. “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