US non-farm payrolls grow more quickly than expected in February, but details softer
By Alexander Bueso
Date: Friday 08 Mar 2024
(Sharecast News) - Hiring in the U.S. continued at a strong clip last month, albeit alongside a very clear slowdown in wage growth.
Furthermore, downwards revisions to the data for the previous two months and an increase in the unemployment rate appeared to reflect a weaker underlying picture.
According to the Department of Labor, non-farm payrolls jumped by 275,000 in February.
That easily surpassed the 198,000 consensus forecast as compiled by Dow Jones Newswires.
But the non-farm payrolls readings for December and January were revised down by a combined -167k to 290,000 and 229,000, respectively.
Average hourly earnings rose by 0.14% (consensus: 0.2%),
The rate of unemployment meanwhile, which is derived from a different survey than the one which generates the payrolls figures, increased by two tenths of a percentage point to 3.7%.
"Alongside the rise in the unemployment rate to a two-year high and a much weaker rise in wages, there is less reason now to be concerned that renewed labour market strength will drive inflation higher again," said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
"[...] The decline in the job quits rate to below its pre-pandemic level suggests wage growth will slow a lot further over the coming months," he added.
Ian Shepherdson at Pantheon Macroeconomics told clients that while payroll growth had remained "steady" thus far, a clear break to the downside was looming.
Indeed, the third consecutive monthly drop in the NFIB survey measure of hiring intentions - which was published the day before - pointed to a real risk of an outright decline in private payrolls by mid-year.
"We also expect better inflation data for February and March, so we're sticking for now to our call that the first easing will come in May," he went on to say.
"But this is a 55/45 shot; it would be no surprise if the Fed waits until June."
For his part, overnight Michael Hartnett at Bank of America said in a research note that the drop in the "quits ratio" reported two days before was consistent with Fed rate cuts and "labour market risk".
Nonetheless, a non-farm payrolls reading greater than 225,000 would equate to a "no landing" economic scenario.
-- More to follow --
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