DWS: US Labor Markets in February: robust but cooling
Christian Scherrmann, Chief U.S. Economist at DWS, comments on the recently released US employment figures:
'Hiring was a bit below expectations at 151k, with the government actually adding 11k jobs against fears of DOGE job cuts showing up in the numbers. Still, we are seeing a slowdown compared to the 12-month average hiring of 33k. The private sector added 140k, also a bit below expectations. Temporary help services and leisure and hospitality were particularly weak. The positive surprise was a relatively robust 10k gain in manufacturing hiring, which is at odds with sentiment indicators. In addition, January's numbers were revised down a bit, adding to the narrative that labor markets stabilized in February. The participation rate fell 20 basis points, pushing the unemployment rate up slightly to 4.1% from 4.0%, as some of the decline in total employment moved into unemployment. Wage growth slowed a bit to 0.3% m/m from 0.4% m/m, supporting the Fed's narrative that labor markets are not currently a source of inflationary pressure.
For now, the data speak a neutral language: no significant weakness, but not a boom either, rather a picture that might be expected from an economy cooling from high growth rates to its potential. Looking ahead, the impact of government job cuts, continued uncertainty in business and industry that could dampen demand, and the impact of lower immigration remain to be seen and certainly pose downside risks from here.'