The Bureau of Labor Statistics (BLS) reported that 151,000 jobs were created in February, falling short of expectations, which ranged between 160,000 and 170,000. Additionally, job gains from the previous two months were revised lower by a net 2,000—December was revised up by 16,000, while January was revised down by 18,000. A significant factor in the report was the birth/death model, which added 136,000 jobs. Without this adjustment, job growth would have appeared much weaker.
Wages & Hours Worked
- Average Hourly Earnings increased by 0.3%, aligning with forecasts.
- On an annual basis, wage growth came in at 4%, slightly below the expected 4.2% but higher than last month’s revised 3.9%.
- Average Weekly Earnings, which account for both wages and hours worked, also rose 0.3% but were up just 3.4% year-over-year, down from a revised 3.6% in January.
- The average workweek remained unchanged at 34.1 hours—the lowest level in 15 years—indicating potential weakness in the labor market.
Unemployment Data & Household Survey
The jobs report consists of two key surveys:
- The Business Survey, which provides the headline job creation numbers.
- The Household Survey, which determines the unemployment rate.
The Household Survey showed a loss of 588,000 jobs in February, while the labor force shrank by 385,000. This pushed the unemployment rate from 4% to 4.1%. However, if those who exited the labor force were counted, the unemployment rate would be 4.4%.
The broader U-6 unemployment rate, which includes underemployed and discouraged workers, spiked from 7.5% to 8%, its highest level since October 2021.
Notably, the job losses were concentrated in full-time positions, with 1.2 million full-time jobs lost, offset by a gain of 610,000 part-time jobs. Additionally, all net job growth came from workers aged 16–19 (+80,000 jobs), while employment for those 20 and older declined by 667,000.
Market & Federal Reserve Outlook
This weaker-than-expected report puts additional pressure on the Federal Reserve to cut rates as early as May. Markets are now fully pricing in three rate cuts for 2025.
Treasury Secretary Bessent’s Comments
Speaking on CNBC, Treasury Secretary Scott Bessent shared his outlook on the economy, noting that it has become reliant on government spending and may experience a “detox period.” He acknowledged signs of a slowdown but emphasized that it would take six to twelve months before the administration’s economic policies take full effect.
Bessent also addressed tariffs, describing them as a one-time price adjustment, and highlighted declining oil prices and mortgage rates as positive economic factors.
Key Economic Reports Next Week
- Tuesday: NFIB Small Business Optimism Index, JOLTS Job Openings
- Wednesday: Mortgage Applications, Consumer Price Index (CPI), 10-Year Treasury Auction
- Thursday: Producer Price Index (PPI), Initial Jobless Claims, 30-Year Treasury Auction
Technical Analysis
- Mortgage Bonds: Held support at 101.39 and are moving higher, breaking above 101.55 but failing to surpass the next resistance level at 101.68.
- 10-Year Treasury Yield: Trending lower and testing its 200-day Moving Average, a key level. A break below this could push yields back down to recent lows of 4.126%.
