March 13, 2023

February jobs report could lessen next rate hike, says NAFCU Chief Economist

The Bureau of Labor Statistics (BLS) issued the latest jobs report Friday, which revealed that the unemployment rate rose to 3.6 percent in February. NAFCU Chief Economist and Vice President of Research Curt Long noted the report “was a positive one overall.”  

“Although the unemployment rate rose, job gains were strong and labor force participation grew signaling Main Street’s optimism in hiring,” Long said. "The bigger news was the lowest month-over-month gain in average hourly wages in a year," added Long. "That result, paired with a downtick in average hours worked, throws some doubt into the FOMC’s March decision. Although a 50-basis point hike is still on the table, this report is more supportive of a quarter-point increase."

Long sat down with CUBroadcast host Mike Lawson to discuss the latest figures noting that the labor force participation rate ticked up in February marking the "third straight month participation has improved and is back to the highest point it's been since March 2020."

Of note, Long provided additional insights into the report in a new NAFCU Macro Data Flash report. Non-farm payrolls increased 311,000 last month. In addition, January payrolls were revised down 13,000, while December saw a -21,000 revision.

Results among major private sector industries were mostly mixed. The biggest winner was leisure and hospitality (+105,000), followed by education and health (+74,000), and retail trade (+50,000). Industries that lost jobs were the information sector (-25,000) and transportation and warehousing (-22,000). 

The labor force participation rate rose 0.1 percent and the average hourly earnings grew 8 cents in February.

Of note, Federal Reserve Chairman Jerome Powell testified before Congress last week and reiterated the Fed’s commitment to returning inflation to its 2 percent goal, while promoting maximum employment and stable prices. Long said Powell’s “hawkish” testimony to the Senate Banking Committee indicated “a 50-basis point hike in March…became the odds-on outcome.”

For more economic updates from NAFCU's award-winning research team, view NAFCU's Macro Data Flash reports.