The U.S. economy added 151,000 jobs in February according to the Bureau of Labor Statistics (BLS) survey of employers. The increase was slightly below expectations for a gain of 160,000. Job gains in the prior two months were revised lower by 2,000. The economy added 199,700 jobs on average over the trailing 3 months versus a 198,700 average at the end of 2023. The February survey was completed prior to most of the recent announcements of Federal job cuts. Non-postal service Federal jobs fell by just 6,700 during the survey period. Education and health care sectors added 73,000 during the month and remain the most consistent contributors to U.S. employment gains. Retail and Leisure & Hospitality sectors saw small reductions in payrolls.

The BLS’s survey of households reported an increase in the unemployment rate to 4.1% in February from 4.0% in the prior month. The size of the U.S. labor force decreased by 385,000 while the survey of households revealed an increase in the number of unemployed individuals by 203,000. Differences between the surveys of companies and individuals was unusually wide in February.   

Average hourly earnings — a proxy for wage growth — rose 0.3% for the month and 4.0% vs. a year ago. The monthly data matched consensus expectations. The 3-month annualized rate of wage growth decelerated to 3.6% from 4.0% in the prior month. 

Source: Bloomberg, US Bureau of Labor Statistics.

Bottom line: February’s data provided little new information on the economy and may be the last report we see prior to an expected increase in volatility in the Federal Government sector. Wages remain on a gradual pace of deceleration. Private sector growth appears steady heading into potential public sector disruptions. Markets have been building in expectations for softer growth and currently discount 3 rate cuts from the Federal Reserve (Fed) by the end of the year. Equity futures were slightly weaker, and credit markets had a moderately positive tone following the report.

Gary Pzegeo, CFA, is co-chief investment officer of CIBC Private Wealth. His responsibilities include chairing the Asset Allocation Committee and overseeing the investment administration, portfolio oversight, and fixed income and equity trading functions.