In the United States, job growth stabilized last month, while the country’s unemployment rate increased.
Currently, the United States labor market is experiencing what can be described as an ambiguous situation, concerning which a negative characteristic is more appropriate than a positive one. It’s worth noting that this state of affairs largely depends on the rapidly changing policies of the government of the country.
In February, nonfarm payrolls in the United States increased by 151,000 following the downward revision in the previous month. The unemployment rate in the US rose to 4.1% last month. The relevant information was published on Friday, March 7, by the United States Bureau of Labor Statistics.
The mentioned data suggests that the situation in the United States labor market is on a downward trajectory. Currently, the number of people permanently out of work is increasing. Also, fewer workers on federal government payrolls and a jump in those working part-time for economic reasons. The number of citizens of the United States holding multiple jobs reached almost 8.9 million in February. It is worth noting that this figure is a record.
The specified data was published at a time when there is growing concern about the impact of the policies of the President of the United States, Donald Trump, on the situation in the country’s economic system. In recent months, inflation in the US has been sticky. Against the background of this circumstance of the current configuration of economic reality in the United States, consumers are beginning to pull back on spending. If the mentioned situation persists, it is highly likely that businesses will rethink their hiring plans.
Bill Adams, chief economist for Comerica Bank, stated that the near-term path of policy, and therefore the economy’s path is cloudy. It was also noted that if the United States government continues its policy of significantly increasing tariffs and spending cuts, these policies would continue to weigh on job creation in the next few months, which is likely to further growth of the unemployment rate.
Federal Reserve policymakers have stated that they would like to see more progress on making inflation sustainably easing, including in next week’s consumer price index, before resuming interest rate cutting.
The S&P 500 opened higher. The dollar has fallen. At the same time, Treasury bond yields were lower.
The February advance in hiring is primarily related to the upward dynamic in areas such as healthcare, transportation, and finance. Government payrolls, which have been the main driving force behind payrolls’ upward trajectory for a long period, showed the weakest growth rate in almost a year in February. At the same time, federal payrolls in the past month were down the most since June 2022.
The payroll survey references include a week that includes the 12th of the month, which in February coincided with most of the Donald Trump administration’s government firings. March data will look a lot uglier as a result. The corresponding statement was made by Stephanie Roth, chief economist at Wolfe Research LLC.
The jobs report published on Friday fully reflects the second presidential term of Donald Trump. Also, in this case, there is data that captures a kind of statistical result of the actions of the administration of Mr. Trump to reduce the number of government employees. The mentioned actions have already caused such a scale of job cutting to be recorded in the United States in February, which is the largest since the coronavirus pandemic began. According to media reports, referring to economists, there is currently a non-minimal probability that the US could lose more than half a million jobs by the end of the present year due to the federal job cuts. Moreover, experts interviewed by journalists, pay special attention to the fact that the specified process may have side effects in the context of the impact on the situation in the United States economic system as a whole.
Donald Trump expects that the deployment of his tariff policy will have such a positive result as an increase in the number of jobs in the manufacturing sector. It is worth noting that the mentioned policy has already become a kind of incentive to act for certain companies. In this context, the example of technology brands such as Apple Inc. and HP Inc., which are considering the possibility of increasing investment in the United States, is illustrative. At the same time, the current configuration of Washington’s tariff policy does not in all cases stimulate what can be described as domestic efforts. For example, aluminum manufacturer Alcoa Corp. warned that levies could cause the loss of 100,000 jobs.
It is also worth noting separately that any efforts by Washington to restrict immigration or send migrants home will be a deterrent in the context of the impact on the main source of job growth in recent years.
Kevin Hassett, Donald Trump’s director of the National Economic Council, announced plans to reduce government employment on Friday while talking to media representatives. Also, in the relevant context, the intentions related to reducing the volume of government spending and increasing employment in the manufacturing industry were separately noted.
The job report published on Friday consists of two surveys. One of the parts of this report concerns businesses, which produce the payroll figures. Another survey focuses on households. In this case, data on unemployment and participation are published. It is worth noting that the household survey has its own measure of employment, which decreased by almost 600,000, the most in over a year.
The increase in unemployment has been reflected in the fact that the number of people who permanently lose their jobs is increasing. It is worth noting that the scale of unemployment turned out to be the largest among Hispanic people and those who did not have a high school diploma. The number of people working part-time for economic reasons has reached an almost four-year high. Against this background, a broader measure known as the underemployment rate boosted to its highest level since 2021.
The report published on Friday also contains information according to which the participation rate has fallen to its lowest level in the last two years, especially among men. It is worth clarifying that this indicator reflects the proportion of the population who is working or looking for work. The rate for workers aged 25-54, also known as workers of prime age, remained unchanged at the 83.5% mark.
Economists also pay special attention to how the dynamic of labor supply and demand affects wage growth, especially given the risks of a repeated increase in inflation. The report contains information according to which the average hourly earnings rose by 0.3% compared to the figure recorded in January after a downwardly revised 0.4% gain.
In the United States, applications for unemployment benefits are approaching the levels seen before the coronavirus pandemic. It is worth noting that there is currently a high probability that the mentioned indicator will show growth in the foreseeable future, as large companies such as Goldman Sachs Group Inc. and Walt Disney Co. have announced significant workforce reductions. It is possible that this circumstance, combined with the side effects of layoffs in the federal government, will provoke an intensification of the upward dynamic of unemployment in the coming months.
As we have reported earlier, Bank of America CEO Says About Inflation Impact on US Economy.
