The U.S. economy unexpectedly lost jobs in February, casting a cloud on the strength projected by multiple labor market data points received so far this year. Following the data, the Dollar Index futures (DX) lost ground and bond prices rose, reflecting hopes that the Federal Reserve could consider easing at the March rate-setting meeting.
The jobless rate and the inflation reading of the report, however, have a different read-across for the central bank policymakers.
See-saw Trend: Non-farm payrolls contracted by 92,000 in February compared to the downwardly revised gain of 126,000 in the previous month, a Bureau of Labor Statistics report stated on Friday. Economists, on average, had expected a modest job gain of 58,000 for February, down from the 130,000 payroll growth reported initially for January.
Ahead of the report, WisdomTree Senior Economist Jeremy Siegel said the market braced for 50,000 to 100,000 new jobs—well below the immigration-fueled surges of prior years but consistent with a slower-growing labor force.
Jobless Rate Edges Higher: The unemployment rate, which is based on the household survey, remained ticked up to 4.4% from January’s 4.3%. The U6 unemployment rate, which measures the number of people who are jobless but actively seeking employment, was at 7.9% versus 8.1% in January. Meanwhile, the labor force participation rate was at 62%, down from a revised reading of 62.1% for January.
Inflation Picks up Slightly: The average hourly earnings rose at a slower month-over-month rate of 0.4%, same as in the previous month. The annual rise in the metric ticked up to 3.8% from 3.7%.
The private sector lost 86,000 jobs in January, belying expectations for a 65,000 gain while the government payrolls shrunk by 25,000.
Private Sector Job Gains - Industry-wise:
- Manufacturing: (-12,000) Vs consensus of +3,000
- Mining: -2,000
- Construction: -12,000
- Wholesale trade: +6,000
- Retail trade: +2,300
- Transportation & warehousing: -11,300
- Utilities: +1,300
- Information: -11,000
- Financial activities: +10,000
- Professional and business services: -5,000
- Private education & health services: -34,000
- Leisure and hospitality: -27,000
- Other services: +8,000
A separate Commerce Department report showed retail sales falling less than expected in January relative to the previous month. The annual growth accelerated from the pace seen in December.
Rate Cut Odds Edge Up: According to CME Fedwatch Tool, which factors in expectations of futures traders, odds of a pause edged lower, although remains elevated at 95.3%. The odds of a quarter-point cut increased to 4.7% from 3.7% seen on Thursday.
