The Bureau of Labor Statistics (BLS) reported that there were 275,000 jobs created in February, which was stronger than the 200,000 new jobs that had been forecasted. However, revisions to December and January cut 167,000 jobs in those months combined while the unemployment rate rose from 3.7% to 3.9%, marking the first increase since October.
What’s the bottom line? While the headline job growth figure beat estimates, future revisions lower are a very real possibility, given that we continue to see this pattern from the BLS. Plus, it’s important to look at both surveys within the Jobs Report, which told two different stories regarding job growth.
The Business Survey is where the headline job number comes from, and it’s based predominately on modeling and estimations. The Household Survey, where the Unemployment Rate comes from, is considered more real-time because it’s derived by calling households to see if they are employed.
This Household Survey also has a job creation component, and it showed 184,000 job losses. Plus, February’s report included a sizeable increase in part-time workers (+51,000), while full-time workers fell by 187,000, suggesting some softening in the job market and economy overall.
Remember, the Fed began aggressively hiking the Fed Funds Rate (the overnight borrowing rate for banks) in March 2022 to try to slow the economy and curb runaway inflation. Following eleven hikes in this cycle, the Fed pressed pause at their last four meetings as signs of cooling inflation grew.
While the Fed has stressed that they don’t expect to begin cutting rates until inflation is “moving sustainably toward 2 percent,” a cooling job market is one factor that could encourage members to cut rates sooner rather than later.