February Employment: Not Just Inflation That’s Hot

Job growth continued at an impressive pace in February, with employers adding 678K new jobs. The strong pace of hiring comes as the availability of workers continues to improve. The labor force participation rate ticked higher in February, but the jobs market continues to tighten with the unemployment rate falling to a fresh cycle low of 3.8%. Average hourly earnings growth paused in February, which should ease concerns that wages—and therefore inflation—are running away. Yet the solid state of the labor market alongside the most significant inflation in decades leads us to believe that so long as the Russia-Ukraine conflict does not significantly escalate, the FOMC is poised to begin a tightening cycle on March 16.

Employment Gains Robust and Broad-Based

Nonfarm payrolls increased by 678K in February, about 250K above the Bloomberg consensus. Net upward revisions to the prior two months added another 92K to the level of employment. The 678K increase in payrolls was the largest monthly increase since last July. Employment gains were broad-based and nearly all major sectors saw an increase in payrolls over the month. Leisure & hospitality employment posted another solid gain of 179K. Payrolls in the hard-hit sector are now “only” 9% below February 2020 levels. Transportation & warehousing employment remained on a tear, increasing by 48K in the month and by 10% compared to February 2020. Professional and business services, health care and construction were the other major standout sectors for job growth in February. READ FULL ARTICLE>>