Macro Flash : A very strong U.S. employment report in February

Macro

Christopher Dembik

Head of Macro Analysis

Summary:  In line with the latest ADP report released past Wednesday and the improvement in the employment component of the ISM report (out at 55.6 in February), the NFP report confirms the U.S. labor market is very strong.


The U.S. February Employment Report is all-round strong: employment increased by 273k vs 175k expected and the 3-month moving average is out at 243k, which is the highest level since September 2016. In addition, average hourly earnings are at 0.3% on a monthly basis, in line with consensus, and the unemployment rate dropped to 3.5% from 3.6%. One of the most important parts of the report was about job growth evolution in cyclical industry. After prolonged months of slowdown or even job destruction (in the manufacturing sector), we start to see a job growth improvement in cyclical industry, notably the construction sector (+3% YoY in February). Without much surprise, there is no indication at this stage that the coronavirus outbreak has had an impact on the labor market. The potential consequences of COVID-19 on the U.S. labor market will mostly dependent on the amplitude of the demand shock on the U.S. economy, and especially the service sector. The March report will probably provide more insights on that issue.

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