ECONOMY Payrolls rose 311,000 in February 2023, more than expected, showing solid growth

 ECONOMY

Payrolls rose 311,000 in February, more than expected, showing solid growth

 POINTS

• Nonfarm payrolls rose by 311,000 in February, above the 225,000 Dow Jones estimate.
• The unemployment rate increased to 3.6%, above expectations.
• Average hourly earnings climbed 4.6% from a year ago, less than expected, in a positive sign for inflation.
• Leisure and hospitality, retail, and government led job creation by sector.

• Job creation decelerated in February but was still stronger than expected despite the Federal Reserve’s efforts to slow the economy and bring down inflation.

  Nonfarm payrolls rose by 311,000 for the month, the Labor Department reported Friday. That was above the 225,000 Dow Jones estimate and a sign that the employment market is still hot.

• The unemployment rate rose to 3.6%, above the expectation for 3.4%, amid a tick higher in the labor force participation rate to 62.5%, its highest level since March 2020.

  The survey of households, which the Bureau of Labor Statistics uses to compute the unemployment rate, showed a smaller 177,000 increase. A more encompassing unemployment measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 6.8%, an increase of 0.2 percentage point.

  There also was some good news on the inflation side, as average hourly earnings climbed 4.6% from a year ago, below the estimate for 4.8%. The monthly increase of 0.2% also was below the 0.4% estimate.

  Though the jobs number was stronger than expectations, February’s growth represented a deceleration from an unusually strong January. The year opened with a nonfarm payrolls gain of 504,000, a total that was revised down only slightly from the initially reported 517,000. December’s total also was taken down slightly, to 239,000, a decrease of 21,000 from the previous estimate.

  Stocks were mixed after the release, while Treasury yields were mostly lower.

  “Mixed is an apt descriptor. There’s something for everybody in there,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “We’re still in a recession for certain parts of the economy.”

  The jobs report likely keeps the Fed on track on raise interest rates when it meets again March 21-22. But traders priced in less of a chance that the central bank will accelerate to a 0.5 percentage point increase, dropping the likelihood to 48.4%, or about a coin flip, according to a CME Group estimate.

  “Perhaps the best news from this report was the easing of wage pressures,” said John Lynch, chief investment officer at Comerica Wealth Management. “A drop in the largest costs for businesses is a welcome development. Nonetheless, 50 basis points is still on the table for the March policy meeting, given recent economic strength and dependent on next week’s [consumer price index] report.”

  Leisure and hospitality led employment gains, with an increase of 105,000, about in line with the six-month average of 91,000. Retail saw a gain of 50,000. Government added 46,000, and professional and business services saw an increase of 45,000.

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