February Jobs - Payroll Additions Accelerate, Wages Take a Breather

Payroll additions surprise positively again. U.S. job growth boomed in February while wage growth slowed, highlighting a steadily improving, though extremely tight labor market that should keep the Fed on track for a rate increase later this month. Whereas some observers had seen potential for more than one 0.25% increase in March, economic uncertainties posed by the ongoing conflict between Russia and Ukraine likely limit scope of the initial liftoff.

678K payrolls added in February – Well above forecast. The U.S. labor market added 678K jobs in February, and January numbers were upwardly revised to 481K (from +467K originally reported). Forecasts ranged from +80K to +730K with a median of +423K so today’s outcome exceeded expectations. Job gains were again broad based, but led by leisure & hospitality (+179K), professional & business services (+95K), healthcare (+64K) and construction (+60K). A precipitous decline in COVID cases and loosening restrictions likely aided hiring, but employers are still struggling to fill near-record levels of job openings to meet robust demand from households and businesses.

3.8% unemployment – lowest since pre-pandemic. The U.S. unemployment rate fell 0.2% to 3.8% in February. Forecasts ranged from 3.7% to 4.1% with a median of 3.9%. The labor force participation rate increased modestly from 62.2% to 62.3%, while hourly wages were unchanged compared to January.