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For the Fed, a Little More Patience
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The February employment report bolsters the Federal Reserve’s decision to stop raising interest rates. Fed officials have been assessing whether market turmoil, trade tensions and a partial government shutdown at the end of 2018 left a mark on the U.S. economy. Housing, consumer spending data and purchasing managers indexes have hinted at a slowdown. A weak jobs report piles on. To be sure, the latest numbers come with an asterisk: Payrolls may have been distorted by the effects of the shutdown and severe weather. Fed officials will want to see another month of data before reaching any conclusions. But Friday’s report will make officials even more patient until data either confirm of falsify the latest blip, Nick Timiraos writes. |
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Round Mound of Rebound
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During the current expansion, the labor market has delivered just a few really ugly months. The worst were followed by big rebounds. January 2011 registered a gain of 20,000 jobs, March 2011 jumped to 213,000. May 2016 was a paltry 15,000, June 2016 was 282,000. September 2017 slipped to 18,000, October 2017 hit 260,000. There's no guarantee that the pattern will repeat, but it's a reminder to look at broader trends.
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Silver Linings
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The brightest spots in Friday's jobs report: measures of unemployment and hourly wages. For starters, the broadest measure of unemployment—which includes the discouraged and part-time workers who want full-time work—fell to its lowest level since 2001.
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And average hourly earnings rose at the fastest pace in nearly a decade. Weekly hours fell a little, dragging down take-home pay, but subsiding inflation should help bolster real disposable income.
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Gray Cloud
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The labor-force participation rate didn't budge—and for prime-age workers actually fell a touch. To keep growing, the economy needs to draw more potential workers off the sidelines.
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Winners and Losers
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The weak sectors of the job market last month included construction, mining and retail, while the health-care and business-services industries created jobs in February. Despite job creation stalling last month, figures from the two prior months were revised higher.
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What Economists Are Saying
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As the economy slows, a reduction in the pace of job creation is to be expected. It seems likely that both the unexpectedly strong payroll gain in January and the surprisingly weak result in February were both anomalies. —Jim Baird, Plante Moran Financial Advisors
The labor market remains robust and that the economy remains quite strong despite the weak February number. —Tendayi Kapfidze, Lendingtree.com
We can debate whether today’s payroll number signals a broader slowdown of the economy, but the bottom line is slack in the labor market is harder to see, especially considering the increases we have witnessed in wage data over the past few months. —Charlie Ripley, Allianz Investment Management
The U.S. economy has slowed over the past three months and hiring eased along with it. —Joseph Brusuelas, RSM US
This morning’s jobs report ... may be an early sign that slowing global growth, trade tensions, stock market volatility, and the recent federal government shutdown are weighing on the job market. —Andrew Chamberlain, Glassdoor
The sharp slowdown in payroll employment growth in February provides further evidence that economic growth has slowed in the first quarter. That adds weight to our view that the Fed will not be raising interest rates this year. —Michael Pearce, Capital Economics
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