Illustration: Annelise Capossela/Axios
The February jobs report had one thing for everybody: encouraging developments for American employees and the Federal Reserve’s inflation-fighting efforts.
Why it issues: Economists and data-watchers hoped the most recent payrolls report would clear up the large query of the second: Will extra sizzling information power the Fed to tighten extra aggressively?
- The report does not settle the query by hook or by crook. Some particulars level to a job market nonetheless bursting on the seams, alongside others that recommend inflationary pressures are diminishing.
Particulars: January’s fiery-hot jobs report confirmed that employers have an insatiable urge for food for extra employees. That is nonetheless the case — a welcome growth for job-seekers.
- Final month, employers continued so as to add employees at a fast charge, with 311,000 general positions. And revisions didn’t dramatically alter the image for January or December.
In the meantime, a surge of employees (roughly 270,000) re-entered the labor power final month, serving to push up the unemployment charge barely to three.6%.
- Notably, the labor power participation charge for prime-age employees (these between 25 and 54) is again at its pre-pandemic degree of 83.1%.
- That extra employees are returning to the job market is nice information, as a result of it might assist carry the labor market again into stability in a much less painful method. Employer demand for employees doesn’t have to return down as a lot if extra employees can be found to fulfill mentioned demand.
Between the traces: Wages are particularly essential for the inflation outlook, and there the information appears favorable. Common hourly earnings have been up solely 0.2% final month.
- Over the past three months, they’ve risen at a 3.6% annual charge, down from 4.9% within the remaining months of final yr. Slower wage progress ought to diminish worth pressures.
What they’re saying: “When you have a labor market that’s exhibiting much less tightness on the labor power participation entrance, that can have a tendency — all else equal — to place downward strain on wage progress,” Gregory Daco, chief economist at EY-Parthenon, tells Axios.
The underside line: Extra job stories just like the one in February might imply a extra gradual labor market cooling that may be much less painful for American employees.
- Consideration now turns to subsequent week’s Shopper Value Index report, which can maintain extra clues about inflationary pressures and might be the deciding issue on whether or not the Fed hikes by a quarter-point or half-point in 12 days.