The U.S. Economy Created 311,000 Jobs in February… The unemployment rate edged up from 3.4% to 3.6%, while the labor force participation rate remained steady at 62.5%.
What it means— The jobs gain beat the estimate of 225,000, but it’s a long way from the half-million new jobs reported in January. Gains were made in the expected industries, like leisure and hospitality, retail, and health care, while technology, transportation, and warehousing lost headcount. Apart from the number of jobs, earnings cooled a bit. The average hourly earnings rate rose just 0.2% and was up 4.6% over the last year, which trails the inflation rate of 6.5%. Also, the average workweek declined by 0.1 hour in February.
It’s not likely that these numbers will be enough to dissuade the Fed from raising rates in a couple of weeks, but they might make the case a bit stronger for a 0.25% rate hike instead of a 0.50% hike.
Fed Chair Powell Tells Congress to Expect Higher Rates for Longer if Economy Remains Strong… Citing the strong jobs numbers and spending reports from February, Powell testified in his biannual reports to Congress that the Fed might have to put more pressure on the economy to bring down inflation.
What it means— At one point, Sen. Elizabeth Warren challenged Powell, asking what he would tell the millions of people that his monetary policy will throw out of work. Powell shot back, asking the senator if the central bankers should abandon their responsibilities and let inflation lay waste to the economy and all workers. Other than that, there wasn’t much of interest. Powell has been clear; the bulk of the voting members of the Federal Open Market Committee want to be ahead of inflation, not behind it. They’re willing to do whatever it takes to bring inflation close to 2%, even if it means pushing unemployment higher.
Investors in the futures markets finally got the word—don’t fight the Fed—and dramatically changed their view of what lies ahead. On February 8, the futures showed a 90.8% chance of a 0.25% bump on March 22, and 9.2% chance of a 0.50% bump. Now, the odds have flipped to a 19.2% and 80.8% chance of a 0.25% and 0.50% move, respectively. We’ll see. We’re still hoping for 0.25% (especially after the jobs numbers) and then softer economic data in the weeks and months ahead.
January Job Openings and Labor Turnover Survey (JOLTS) Report Eases a Bit: Still 1.9 Openings for Each Unemployed Worker… The JOLTS report showed that openings fell from 11.2 million in December to 10.8 million in January, but a corresponding drop in unemployment left the ratio unchanged.
What it means— It’s interesting that hospitality, leisure, and retail are among the sectors where openings fell the most, since those are the service jobs we’ve been desperately trying to fill. Many of the remaining openings are in light manufacturing and other skilled positions and have been open for more than two years. That begs the question, “If you’ve had a job open for two years, why don’t you train someone for it?”
German Researchers Discover Fungus-Killing Compounds So Effective That They Name Them After Keanu Reeves… Researchers at the German Leibniz Institute for Natural Product Research and Infection Biology identified three compounds that are exceptionally lethal to fungi that attack plants and are effective in treating human infections. When searching for a name for the new class of compounds, the researchers wanted something that conveyed how lethal they were, so they decided to reference Keanu Reeves and his roles in the John Wick and The Matrix movies. The new compounds are called “keanumycins.”
Data supplied by HS Dent Research
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