Friday, March 8th, 2024
The big finale to Jobs Week is out this morning, with the Employment Situation report from the U.S. Bureau of Labor Statistics (BLS) issuing nonfarm payrolls and the household survey. The headline number was still higher than anticipated: 275K versus a 198K consensus estimate. That’s a big jump from expectations, but more than made up for with a January revision of -124K from 353K originally posted to 229K today.
The Unemployment Rate popped 20 basis points (bps) month over month to 3.9% — the highest on record since January of 2022. This would seem to fly in the face of continued outsized employment gains, but when it includes more capable Americans (re-)entering the workforce, as jobs are more prevalent than they had been, this can cause a temporary shift in the Unemployment Rate. That said, Labor Force Participation remained flat — at a decidedly non-robust 62.5% — so understanding these headline numbers may take a bit more investigation.
Hourly Wages was a big part of the BLS story last month, but those rolled off pretty big-time: +0.1%, from +0.2% projected and the downwardly revised +0.5% the previous month. This is perhaps the most reassuring figure in this entire report; analysts had a legitimate concern a month ago that while the labor market remained healthy, wage gains were fomenting higher inflation into the economy. In today’s number, you’d have to go back two years to find a wage growth number as low as +0.1%.
Year over year Hourly Wages came in at 4.3%, again a near-term low point (since June of 2021), and lower than the previous month’s downwardly revised 4.4%. Hours worked grew a tad, from an upwardly revised 34.2 hours to 34.3 in the February print, while the U-6 line — a reflection of “underemployment” — grew from 7.2% to 7.3%, which is the highest figure since December of 2021. In terms of industry, Education/Healthcare came out on top at 85K new jobs filled, followed by Leisure & Hospitality at 58K. Manufacturing lost -4K jobs in the month.
Of course, we’re still looking at this report through the prism of what the Fed wants to do with interest rates. Aside from the still-high headline numbers — nearly 3x the amount of new jobs filled we need to make up for retiring Baby Boomers — this report looks almost exactly like what the Fed was hoping to see: the labor force is coming down gently rather than crashing through the floor. This is consistent with the planned-for “soft landing” now entering its third year of higher interest rate levels.
Fed Chair Jerome Powell has indicated to Wall Street that rate cuts are coming; this report does not appear to speed up the process of said cuts (nobody thinks we’re coming down from 5.25-5.50% on March 20th, when the next Fed meeting concludes), but is overall consistent with cooling levels of the domestic workforce. As such, pre-market futures, which were flat-to-down ahead of the print, are now +30 points on the Dow, +15 on the S&P 500 and +48 points on the tech-heavy Nasdaq. We’re looking good to complete another trading week in the green.
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BLS Jobs Headline Pops, Moderating Elsewhere
Friday, March 8th, 2024
The big finale to Jobs Week is out this morning, with the Employment Situation report from the U.S. Bureau of Labor Statistics (BLS) issuing nonfarm payrolls and the household survey. The headline number was still higher than anticipated: 275K versus a 198K consensus estimate. That’s a big jump from expectations, but more than made up for with a January revision of -124K from 353K originally posted to 229K today.
The Unemployment Rate popped 20 basis points (bps) month over month to 3.9% — the highest on record since January of 2022. This would seem to fly in the face of continued outsized employment gains, but when it includes more capable Americans (re-)entering the workforce, as jobs are more prevalent than they had been, this can cause a temporary shift in the Unemployment Rate. That said, Labor Force Participation remained flat — at a decidedly non-robust 62.5% — so understanding these headline numbers may take a bit more investigation.
Hourly Wages was a big part of the BLS story last month, but those rolled off pretty big-time: +0.1%, from +0.2% projected and the downwardly revised +0.5% the previous month. This is perhaps the most reassuring figure in this entire report; analysts had a legitimate concern a month ago that while the labor market remained healthy, wage gains were fomenting higher inflation into the economy. In today’s number, you’d have to go back two years to find a wage growth number as low as +0.1%.
Year over year Hourly Wages came in at 4.3%, again a near-term low point (since June of 2021), and lower than the previous month’s downwardly revised 4.4%. Hours worked grew a tad, from an upwardly revised 34.2 hours to 34.3 in the February print, while the U-6 line — a reflection of “underemployment” — grew from 7.2% to 7.3%, which is the highest figure since December of 2021. In terms of industry, Education/Healthcare came out on top at 85K new jobs filled, followed by Leisure & Hospitality at 58K. Manufacturing lost -4K jobs in the month.
Of course, we’re still looking at this report through the prism of what the Fed wants to do with interest rates. Aside from the still-high headline numbers — nearly 3x the amount of new jobs filled we need to make up for retiring Baby Boomers — this report looks almost exactly like what the Fed was hoping to see: the labor force is coming down gently rather than crashing through the floor. This is consistent with the planned-for “soft landing” now entering its third year of higher interest rate levels.
Fed Chair Jerome Powell has indicated to Wall Street that rate cuts are coming; this report does not appear to speed up the process of said cuts (nobody thinks we’re coming down from 5.25-5.50% on March 20th, when the next Fed meeting concludes), but is overall consistent with cooling levels of the domestic workforce. As such, pre-market futures, which were flat-to-down ahead of the print, are now +30 points on the Dow, +15 on the S&P 500 and +48 points on the tech-heavy Nasdaq. We’re looking good to complete another trading week in the green.
Questions or comments about this article and/or author? Click here>>