Labor Market Continues to Exude Resilience
Coming into the week, financial markets were looking for validation that January's unexpected strength was not a fluke and that the downward slide in economic momentum experienced late last year had stabilized. On balance, this week's indicators supported that notion.
Total nonfarm payrolls increased 311,000 in February, marking the 11th consecutive month payrolls have beaten consensus expectations. Leisure & hospitality led the charge, adding 105K jobs last month. Strong monthly gains were also seen in retail (50K), professional business services (45K), healthcare (44K) and government (46k). In contrast, net hiring losses were reported in information (-25K), manufacturing (-4K) and financial (-1K). The unemployment rate rose to 3.6% in February from 3.4% in January, as the strong 419K increase in the labor force offset a more muted 177K gain in household employment. The labor force participation rate now sits at a fresh cycle high of 62.5%, not too far off the pre-pandemic average of 63.3%. In another encouraging sign for Fed officials, average hourly earnings rose less than expected last month, up just 0.2%. Along with modest downward revisions to December's and January's gains, average hourly earnings growth has slowed to a 3.6% annualized rate—a pace that is getting much closer within the realm of what would be consistent with 2% inflation.
Also released this week, the Job Openings and Labor Turnover Survey (JOLTS) suggested labor demand remained reasonably firm at the start of the year. While job openings fell 3.7% in January to a level of 10.824 million from an upwardly revised December figure, the level remains high, down only 10% from its peak last March and still running about 50% above pre-pandemic levels. The job openings rate (job openings as a percent of total employment plus job openings) fell to 6.5% in January from 6.8% in December, with the ratio of job openings to the number of unemployed slipping slightly to 1.9 from 2.0 in the prior month. Following signs of greater progress last year, the January decline in job openings points to only modest progress in addressing the substantial imbalance between labor demand and supply.
Outside of the labor market, yet still supportive of resilient demand, the trade deficit widened in January as imports and exports both posted strong monthly gains. Exports rebounded 3.4%, marking the first sequential gain in five months, while imports increased 3.0%. While this has been an encouraging start to the year, questions remain over whether these positive trajectories can be maintained. The January trade report puts net exports on track to be a slight negative for GDP growth in the first quarter
This Week's State Of The Economy - What Is Ahead? - 19August 2022
Wells Fargo Economics & Financial Report / Aug 23, 2022
July data indicates that we celebrated a decline in gas prices by going shopping, boosting retail sales figures. I’m not sure I get the connection...
This Week's State Of The Economy - What Is Ahead? - 11 March 2022
Wells Fargo Economics & Financial Report / Mar 16, 2022
Russia\'s invasion of Ukraine continues to consume nearly all media attention and has created a level of volatility that is not yet reflected in the data released this week.
This Week's State Of The Economy - What Is Ahead? - 05 February 2021
Wells Fargo Economics & Financial Report / Feb 10, 2021
Nonfarm employment rebounded in January, with employers adding 49,000 jobs following the prior month\'s 227,000-job drop.
This Week's State Of The Economy - What Is Ahead? - 08 November 2019
Wells Fargo Economics & Financial Report / Nov 09, 2019
Optimism soared this week on hopes of a forthcoming trade deal, as equity markets hit all-time highs and the yield curve steepened.
This Week's State Of The Economy - What Is Ahead? - 17 September 2021
Wells Fargo Economics & Financial Report / Sep 23, 2021
While we were picking up tree limbs from the yard, data released this week generally showed a stronger economy in August than many expected in the wake of surging COVID cases.
This Week's State Of The Economy - What Is Ahead? - 31 March 2023
Wells Fargo Economics & Financial Report / Apr 08, 2023
This week brought glimpses of market stabilization after weeks of turmoil. Although consumers seem unfazed by the uproar, tighter credit conditions coming down the pipeline will likely weigh on growth.
This Week's State Of The Economy - What Is Ahead? - 20 May 2022
Wells Fargo Economics & Financial Report / May 29, 2022
U.S. retail sales topped expectations in April, while industrial production also grew more rapidly than economists expected. Data on housing starts, home sales and homebuilder sentiment, however, showed tentative signs of cooling.
This Week's State Of The Economy - What Is Ahead? - 25 March 2022
Wells Fargo Economics & Financial Report / Mar 27, 2022
The fact that capital goods shipments surprised on the upside was one of the few things that went right in this week\'s durable goods report.
This Week's State Of The Economy - What Is Ahead? - 11 September 2020
Wells Fargo Economics & Financial Report / Sep 14, 2020
In the holiday-shortened week, analysts’ attention remained on the progress of the labor market. Recent jobless claims data remain stubbornly high and point to a slowing jobs rebound.
This Week's State Of The Economy - What Is Ahead? - 27 August 2021
Wells Fargo Economics & Financial Report / Aug 30, 2021
In other economic news, output continues to ramp up across the U.S., even as the resurgence in COVID cases is leading to some pullback in consumer engagement.
