Amid growing concerns the US could be heading towards a recession, the world’s largest economy added 242,000 new jobs in February, beating consensus forecasts for a 190,000 new positions.
Though the headline number was strong, closer examination of the report revealed a worrying decline in wage growth and a troubling bias towards part-time, service sector jobs. Hourly wages dipped by 3 cents an hour taking the annualized increase lower to 2.2% compared to last month’s more robust 2.5%.
“If the Federal Reserve is looking for signs of inflation in the economy, it’s definitely not going to find them in this jobs report,” said Erik Larsson, chief market strategist at Nihon International. “Most of these jobs were in low-paying sectors and, worse still, most were part-time. The higher-paying, full time jobs in manufacturing declined sharply. Construction jobs jumped by 19,000 but that figure was negated by a fall of 19,000 in mining-related roles.”
There was good news on revisions to previous months’ figures with December’s 262,000 revised up to 271,000 and January’s 151,000 lifted to 172,000.
Jobs growth continues to defy assertions that the US economy is on course for recession but Nihon International points out that employment is often among the last indicators of the onset of recession. “By the time a recession is reflected in employment data, it’s already far too late,” said Larsson.
“We’re not going to see much in the way of monetary policy normalization from the Fed this year if at all,” he concluded.
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