About that jobs miss
This morning’s huge miss on February nonfarm jobs—the headline gain of 20,000 came in at a fraction of our expectations for 167,000 net new jobs and consensus expectations of 180,000—isn’t quite as bad as it looks. Taking the prior two month’s above-consensus gains, both of which were revised further up, the 3-month average increase in nonfarm jobs remained strong at 186,000. The headline miss is inconsistent with strong internals, including a participation rate that held steady at a 5.5 year high, declines in the main and broader U-6 unemployment rates to multiyear lows, a cycle high in wage gains of 3.4% and a strong household report that showed a gain of 255,000 jobs.
The bottom line: while the headline number warrants attention given weak data around the globe, it most likely represents statistical payback for a January number that was much stronger than consensus. Our view is the 3-month average trend, supported by similar trends in the ADP and unemployment claims data, suggests the labor market remains healthy, with job growth continuing, albeit with a modest slowdown consistent with the broader economy. From a policy perspective, this moderation buys more time for the Federal Reserve to stay on pause. In sum, steady as she goes.