Hiring Slowed in February, Employers Created 311,000 New Jobs 3.6%, Increase in the Unemployment Rate

by Wall Street Rebel - Michael London | 03/10/2023 10:27 AM
Hiring Slowed in February, Employers Created 311,000 New Jobs 3.6%, Increase in the Unemployment Rate

In February, companies in the United States created 311,000 jobs, which was a smaller rise than the massive boost seen in January but still enough to put the pressure on the Federal Reserve to raise interest rates rapidly to combat inflation. The positive take away from this data is that the jobless rate has risen to 3.6%.


In February, businesses in the United States created 311,000 jobs, which was a slower rise than the previous month's blockbuster showing but still a healthy gain that might compel the Federal Reserve to quicken the pace at which it raises interest rates to combat inflation.

According to data released by the Labor Department on Friday, the unemployment rate increased from a 54-year low of 3.4% to 3.6%. The primary reason for this rise is that the labor force — including those working and seeking jobs — increased by 419,000.

Analysts polled by Bloomberg anticipated a rise in employment of 225,000 positions.

Fed Chair Jerome Powell testified before Congress this week that central bank officials are likely to raise interest rates higher than expected and could once again speed up the pace of the hikes. He cited January's 500,000 payroll advances and a resurgence in inflation as his primary justifications. The Fed will have a meeting on March 21-22.

Powell said that the employment report that will be released on Friday and new data on inflation that will be released the following week will be very important in determining the path the Fed will take over the coming several months. His comments were the catalyst for this week's downturn in the stock market and fuelled worries that the rapid hikes in interest rates may bring about a recession this year.

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With the announcement of the employment data, stock futures moved erratically in both directions. On Friday morning, it seems like gains will be made in each of the three main U.S. indexes. Yet, investors are waiting for news on the ailing Silicon Valley Bank, which might prompt markets to change their direction.

The total amount of payroll advances for the months of December and January were reduced by 34,000. Despite this, despite slowing to an average of 284,000 in the final three months of 2022 from more than 400,000 in the previous three months of 2022, employment growth remained over 300,000 in February.

The percentage of individuals who are either working or seeking for employment has increased to 62.5%, which is a healthy trend that has the potential to alleviate wage pressures. While this is the highest it's been since the pandemic began in early 2020, it's still a long way off from where it was before COVID, which was 63.4%. The labor force participation rate for employees in their prime working years, those between the ages of 25 and 54, increased to 83.2%, which is slightly higher than its level before the epidemic and the highest it has been since 2008.

A bigger labor supply helps alleviate worker shortages and puts downward pressure on pay since firms don't need to compete as intensively for job applicants. This frees up employers to take on more work, which in turn puts downward pressure on pay.

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The leisure and hospitality sector, which was the sector most severely impacted by the epidemic, led the charge in terms of employment creation, adding 105,000 positions, the majority of which were held in restaurants and bars. Retail gained 50,000 jobs, health care added 44,000, professional and business services gained 45,000, and construction gained 24,000.

There was an increase of 46,000 employment thanks to the federal, state, and municipal governments.

While layoffs continued in the information sector, 25,000 jobs were lost in the technology sector, which is included in the information sector. In addition, the transportation and storage industries lost a total of 22,000 jobs.

The majority of experts are of the opinion that hiring activity slowed down last month. According to Nancy Vanden Houten of Oxford Economics, January's rapid employment expansion was accentuated by the exceptionally warm weather, particularly in businesses such as restaurants, hotels, and construction. She believes that while if the pleasant weather helped increase employment in February as well, it probably wasn't a significant influence.

According to economists' opinions, a rise that likely reversed itself in February was caused by pandemic-related anomalies in how Labor modified its data to account for seasonal changes over the holidays. These peculiarities helped boost January's increases.

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After the nation adds 4.8 million jobs in the previous year, which was only second to the 7.3 million obtained in 2021 due to the nation's recovery from the epidemic, it is generally anticipated that payroll growth would slow down significantly this year.

Yet, as of right now, the country has made up for the loss of 22 million jobs caused by the health crisis. Inflation and rising interest rates from the Federal Reserve are also anticipated to hinder job increases. Just 856,000 new jobs are expected to be created this year, according to Moody's Analytics, while Oxford Economics and Barclays project hundreds of thousands of employment losses.

According to layoffs.fyi, the IT industry has been responsible for the termination of approximately 300,000 employees since the beginning of 2022.


                       U.S. economy adds 311,000 jobs in February as growth stays hot


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