Jobs Report offers new reading on job market tenacity
After explosive job growth earlier in the year, new data on Friday will show whether employers cut hiring in February – and whether a slowdown was enough to fundamentally reverse the dynamics of the job market.
Forecasters estimate the economy added 225,000 jobs last month, which would mark a return to a gentle downtrend that January interrupted with an unexpected 517,000 job gain. Labor Department surveyors have struggled to account for widely varying seasonal factors as well as whiplash from the pandemic, so the December and January revisions to the data are being closely monitored.
On the surface, job growth has reflected the small impact of a series of rate hikes as the Federal Reserve works to rein in inflation. Although goods-related industries have faded as consumers have shifted their spending back to travel and eating out, secure demand and a reluctance to lay off scarce labor have prevented mass layoffs.
And so far, the announced sharp cuts in the technology industry have not spread widely.
“There are sectors of the economy that haven’t recovered to pre-pandemic levels — leisure and hospitality in particular — and they don’t care about higher interest rates,” said Eugenio Alemán, chief economist at financial services firm Raymond James. “We have a scenario where the most interest-rate-sensitive sectors have already contracted, mainly housing, and those sectors have been unable to take down the rest of the economy.”
Analysts generally expect the data to show little or no change in the country’s unemployment rate, which fell to a half-century low at 3.4 percent last month. Americans left the workforce in droves early in the pandemic and were slow to return, helping to keep the job market exceptionally tight — there were still nearly two jobs for every unemployed person in January, the Labor Department reported Wednesday.
Wage growth, which has been the Federal Reserve’s main concern, is forecast to have accelerated year-on-year while remaining below last year’s stunning high.
Since January, continued strength in the job market appears to have prompted renewed acceleration in economic indicators such as retail sales as consumers continue to spend hoards of cash accumulated during the pandemic. Even the housing market has recently shown signs of calming down, with new home sales rising as well as mortgage rates sank slightly (although they recovered in February).
The lighter tone of the data flow has prompted Fed officials – including Chair Jerome H. Powell, during two testimonies on Capitol Hill this week – to warn that they may have to push rates higher than expected to push prices higher press.
https://www.nytimes.com/2023/03/10/business/economy/jobs-report-february-2023.html Jobs Report offers new reading on job market tenacity