The US economy added 678,000 jobs in February, far better than the consensus as the slowing of the micron wave revived the services sector. The unemployment rate fell to 3.8%. Dow Jones fell on Friday after a job report pressed by Russia’s escalating attack on Ukraine.
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Wages in the private sector rose by 654,000 in February, while public jobs rose by 24,000.
Wall Street expected the February Jobs Report to show an increase of 390,000 jobs, including 330,000 in the private sector. Economists expected the unemployment rate to fall to 3.9%.
The average hourly wage was broadly unchanged from the month, while rising by 5.1% from the previous year, well below expectations for annual wage growth of 5.8%. The annual salary increase for January was revised down to 5.5% from 5.7%. However, growth in January was artificially inflated by the decline in hours worked among low-paid jobs as omicron grew. With the restoration of their working hours, total wage gains slowed.
Although wage growth is still strong, it is not keeping pace with inflation, which reached 7.5% in February.
Job gains for December and January were revised by 92,000. The initially reported increase of 467,000 jobs in January was revised to 481,000.
Omicron’s cases fell to about 175,000 daily rates in mid-February, as the Ministry of Labor conducted its surveys of households and employers in the middle of the month, down 800,000 in mid-January. Since then, the pace has dropped to close to 50,000 and the labor market seems to be showing further progress. Initial unemployment claims jumped to 290,000 in the week to January 15, but fell to 215,000 in the week to February 26.
Dow Jones, Treasury Yields responded to the job report
Following the job report, the Dow Jones fell 0.5% on stock market shares on Friday. The S&P 500 lost 0.8% and the Nasdaq 1.7%.
The Jobs Report is unlikely to significantly change the Federal Reserve’s expectations of raising its key interest rate by a quarter at its March 15-16 meeting. However, the pressure on the Fed will continue to increase. Russia’s invasion has exacerbated inflation in commodity prices, and a tight labor market has given workers leverage to push for increases to offset inflation. However, the February jump in labor force participation will be an encouraging sign for politicians that workers removed during the pandemic may return in greater numbers.
The main indexes rose from the lowest levels that Russia invaded Ukraine on February 24, but the stock market has not yet managed to shake off the correction.
On Thursday, the Dow Jones ended 8.2% below its record high on January 4. The S&P 500 fell 9% from its January 3 close. The Nasdaq performed weaker, falling 15.7 percent from a peak on Nov. 19, as growth stocks were overshadowed by rising interest rates.
Yields on 10-year government bonds fell 12 basis points to 1.72% on Friday. He fell 26 basis points for the week.
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Details of the job report
The recreation and hospitality sector added 179,000 jobs. Employment in factories increased by 36,000 people.
Construction jobs increased by 60,000. Wages in health and social work increased by 94,000. Retailers added 37,000 jobs.
Unemployment
The household survey, which is used to determine the unemployment rate, showed that the rank of the employed rose by 548,000 people. The number of people participating in the workforce, which means they are working or actively looking for work, has increased by 304,000.
The share of the working age population (16 and over) participating in the retained workforce rose to 62.3%, which is in line with expectations.
According to a monthly household survey, 6.3 million Americans are unemployed, up from 5.8 million in February 2020.
Please follow Jed Graham on Twitter @IBD_JGraham to reflect economic policy and financial markets.
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