Bankinter | Non-farm payrolls in February surprised negatively, falling to negative 92K (compared to the expected positive 65K and the previous positive 126K).
The unemployment rate rose to 4.4% (versus the expected 4.3% and the previous figure). Non-farm payrolls in February surprised negatively, falling to negative 92K from the previous positive 126K (revised from 130K), a figure well below market expectations (65K).
This is the weakest job creation figure since October last year. Both private sector and manufacturing sector job creation fell short of expectations, falling to negative 86K versus the expected positive 60K versus the previous positive 146K (revised from positive 172K) and negative 12K versus the expected negative 2K versus the previous positive 5K.
There was also weak data in terms of the unemployment rate, which rose to 4.4% compared to the expected 4.3% and the previous 4.3%, and the participation rate worsened to 62.0% compared to the expected 62.5% and the previous 62.1% (revised from 62.5%). Finally, average hourly wages rose to 3.8% year-on-year, compared to the expected 3.7% and the previous 3.7%.
Bankinter analysis team’s view: Weak employment figures in February, with non-farm payrolls falling significantly and the unemployment rate rising slightly again to 4.4%. These figures therefore do not dispel doubts about the state of the US labour market, which has been producing erratic data for several months now.
The view of a weak labour market could increase expectations that future rate cuts by the Fed may occur sooner than expected (the market currently expects the next cut to occur at the June or July meeting, with a 50-50 probability). Among the factors underlying these weak figures are: (1) adverse weather (some states have experienced the worst snowfall in a decade, leading to a slowdown in activity), (2) the impact of productivity improvements from AI, and (3) the weight of economic/political uncertainty on employers when it comes to hiring.
