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? - 09 September 2022
Wells Fargo Economics & Financial Report / Sep 10, 2022
The ISM services index came in stronger than expected, and the underlying details pointed to service sector resilience with business activity and new orders notching their highest reading this year.
This Week's State Of The Economy - What Is Ahead? - 26 July 2024
Wells Fargo Economics & Financial Report / Jul 30, 2024
Economic growth defied expectations in the second quarter. Real GDP expanded at a 2.8% annualized rate, a sizable acceleration from 1.4% in Q1.
This Week's State Of The Economy - What Is Ahead? - 22 March 2024
Wells Fargo Economics & Financial Report / Mar 25, 2024
During February, existing home sales and housing starts both topped expectations and rose at robust rates. Meanwhile, initial jobless claims have remained subdued so far in March.
This Week's State Of The Economy - What Is Ahead? - 16 August 2019
Wells Fargo Economics & Financial Report / Aug 17, 2019
Markets gyrated this week as the spread between the ten- and two-year Treasury\'s turned negative for the first time since 2007. Financial markets seem to expect that the sharp slowdown in growth overseas will soon spread to the United States.
This Week's State Of The Economy - What Is Ahead? - 04 October 2024
Wells Fargo Economics & Financial Report / Oct 10, 2024
The separate survey of households shows employment rising 430K and unemployment falling 281K in September, leading the unemployment rate to unexpectedly tick down a tenth to 4.1%.
This Week's State Of The Economy - What Is Ahead? - 23 February 2024
Wells Fargo Economics & Financial Report / Feb 27, 2024
Stronger-than-expected inflation, underpinned by the mildly hawkish minutes from the January FOMC meeting, drove a move higher in mortgage rates.
This Week's State Of The Economy - What Is Ahead? - 28 August 2020
Wells Fargo Economics & Financial Report / Aug 26, 2020
After a revised look at GDP this week suggested the second quarter may not have been quite as bad as first estimated, attention shifts to the current quarter.
This Week's State Of The Economy - What Is Ahead? - 20 December 2019
Wells Fargo Economics & Financial Report / Dec 21, 2019
President Trump became the third president in U.S. history to be impeached by the House, but removal by the Senate is highly unlikely. The House also passed the USMCA, which should be signed into law in early 2020.
This Week's State Of The Economy - What Is Ahead? - 25 February 2022
Wells Fargo Economics & Financial Report / Feb 27, 2022
What a crazy week. It’s hard to worry about something as relatively unimportant as economic trends when one thinks about what folks in Ukraine are enduring, but economies are nonetheless impacted.
June 2020 Economy At A Glance
Wells Fargo Economics & Financial Report / Jun 18, 2020
The Fed expects to hold interest rates near zero through the end of this year, perhaps well into next year, and maybe even into ’22.
