Nonfarm payrolls in the US were announced as 678K in February, higher than expected 423K. Unemployment rate fell to 3.8%, better than expected 3.9% in market surveys. Two-month net revision in headline employment 92K upwards. In February 2020, before the coronavirus (COVID-19) pandemic, the unemployment rate was 3.5% and the number of unemployed was 5.7 million. The employment gaps caused by Covid continue, and it is necessary to evaluate the net employment increase in the recent period within the scope of resignations due to rotations between jobs and preferential job changes. The decline in the unemployment rate is positive for progress to full employment.
If we look at the sub-items; Job growth was widespread, led by gains in leisure and hospitality, professional and business services, healthcare, and construction. Employment in the entertainment and hospitality sector continued to rise, with 179K gains in February. Professional and business services added 95K jobs in February. Employment in health services increased by 64K in February. Manufacturing added 36K jobs in February. In February, employment in financial activities increased by 35K. In the private sector, an increase of 654K was observed against the expectation of 413K. The average working time for all employees in the private sector increased by 0.1 hours to 34.7 hours in February. Positive in terms of increasing full-time employment. The number of people employed part-time for economic reasons increased by 418K to 4.1 million in February, but remained below the February 2020 level of 4.4 million. These people, who would prefer to work full-time, were working part-time because their working hours were shortened or they could not find a full-time job.
Wages remained unchanged, below expectations of 0.5%, while annual wage growth lost momentum to 5.1%. In wage inflation, January data was revised down to 5.5%. As the annual inflation rate of 7.5% brings real incomes to a level that cannot spend and increase savings, the private sector's demand for salary increases will continue. The increase in low-paying job items such as services seems to have made monthly wage increases low. The rise in low-paying jobs is positive for the return of the pool left out in the pandemic; however, there is a phenomenon such as inflation, and the real income effect of the working population is therefore eliminated.
Fed futures funds rate pricing… Source: Bloomberg, CME Fedwatch
The data does not reveal a clear picture, and while the slowdown in wages eased the Fed to avoid a rapid tightening, the tightness of the labor market supports that they will not hold back from a slow and calm tightening. Supply problems that will deepen due to sanctions will increase inflation, while market uncertainty and increasing costs will negatively affect investment and consumption trends. The tension in Russia is a significant uncertainty and will cause the move on March 16 to remain in the 25 basis point scale with 100% probability.
Kaynak: Tera Yatırım
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