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The Employment Situation: Favorable from The Fed’s Perspective

Thomas Paulson
Mar 8, 2024
The Employment Situation: Favorable from The Fed’s Perspective

The U.S. Bureau of Labor Statistics (BLS) Employment Situation report for February showed a pick-up in the number of unemployed (+325K) as the number of employed ticked down (-185K) and the number of workers ticked up (+150K). This resulted in the unemployment rate ticking higher +20 basis points to 3.9%. (Remember that all of these numbers are at a seasonally adjusted annual rate.) The payroll survey portion of the report (the establishment survey) shows an increase of private-sector employment of +223K, including +42K in food service, +20K in transport & warehousing, and +19K in retail; however, the biggest increases are in the slow recovery categories of education & healthcare (+85K). Payrolls for December and January were revised lower by -165K, essentially making the +223K gains in private-sector employment only +58K. Additionally, some analysts peg “weather induced” hiring at 50K; stripping that away makes the +58K go to only +8K.

The prior month’s JOLTs report showed a -48K decline in quits. Layoffs were little changed as the increase in professional & business services (+85K) was offset by declines elsewhere. Overall hires were down to 5.3M; last January the figure was 5.9M, so down 600K year-over-year. Openings were 7.9M, down from 9.3M last January for a decline of 1.4M. The opening rate (openings-to-employment) is now 5.3%, down from 6.3% last year. In terms of wages, the +4.5% year-over-year rate for nonsupervisory employees is still at a high rate, the chart below shows a slight downward trend, but not by much.


Source: U.S. Bureau of Labor Data Statistics

How the releases have influenced expectations for interest rates and monetary policy is shown below in CME’s FedWatch tool; expectations for no cuts following the June 12 meeting.


Source: CME FedWatch Tool

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Thomas Paulson

Director of Research and Business Development,

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more. He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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