The February jobs report showed hiring topped expectations, as employers added 275,000 payroll positions, while the unemployment rate unexpectedly rose. After the jobs report, which doesn't make a strong case for a near-term Fed rate cut, S&P 500 futures moved higher from Thursday's all-time record close.
Jobs Report Hits And Misses
The 275,000 overall employment gain exceeded Wall Street's 190,000 forecast, according to Econoday. The 223,000 rise in private-sector payrolls beat estimates for a 150,000 gain. Meanwhile, government payrolls rose by 52,000.
However, hiring gains in December and January were revised down by a combined 167,000 jobs.
The downward revisions more than make up for February's stronger-than-expected hiring. Still, the overall picture is of a solid job market. The monthly average employment gain over the past three months is 265,000, including 205,000 private-sector jobs. In both cases, that's the strongest three-month hiring stint since last June.
The average hourly wage rose 0.1%, as 12-month wage growth of 4.3% matched forecasts. The wage data is consistent with a picture of easing wage pressures, which should continue to help reining in inflation.
Household Survey
The headline job and wage figures come from the Labor Department's monthly survey of employers. The separate household survey details labor force participation, work status and the unemployment rate.
The household survey comes with a higher margin of error than the employer responses, so monthly changes should be taken with a grain of salt. However, the household survey has been known to lead the employer survey at economic turning points, so it shouldn't be ignored.
The unemployment rate unexpectedly rose to 3.9% vs. forecasts of a steady 3.7% rate. That came as the ranks of the employed fell by 184,000 and the number of unemployed persons rose by 334,000. The difference reflects the addition of 150,000 to the labor force, meaning they're working or looking for work.
Among the 25-and-up population, unemployment held at 3.2%. The increase came among younger workers, including an increase to 12.5% from 10.6% among those aged 16 to 19.
More Jobs Report Details
The health care industry added 66,700 jobs, while employment at food service and drinking places rose by 41,600. Social assistance agencies hired a net 24,000 workers, construction firms 23,000, retailers 18,700, and courier and messenger services 17,300.
Soft spots included temporary help services (-15,400) and manufacturing (-4,000).
The details of the jobs report showed that hiring remained broad-based, with the diffusion index rising to 62.6 from 61.8. Values over 50 indicate more industries are hiring than firing.
Fed Rate Cut Odds
After the February jobs report, markets were pricing in 27% odds of a rate cut by May 1, up from 26% ahead of the data, according to CME Group's FedWatch page. Odds of a cut by the June 12 meeting stood at 74%, down from 76%.
For all of 2024, markets are leaning toward four quarter-point rate cuts, with odds rising to 63% after the jobs data, up from 59%.
S&P 500, 10-Year Treasury Yield
The S&P 500 fell 0.7% after the jobs report in Friday afternoon stock market action, reversing early-session gains. On Thursday, the S&P 500 climbed 1% to a new record closing high.
The 10-year Treasury yield, after sliding nine basis points to 4.09% in the week's first four sessions, was little changed.
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