Economic Commentary

Economic Commentary

March 8, 2024

Revisions smooth monthly trend, but job and wage growth boost chances of soft landing

Executive summary

U.S. payrolls added 275,000 jobs in February, well above the consensus expectations of 200,000. But downward revisions sliced 167,000 off the December and January tallies, knocking both below 300,000 and slowing the six-month average to 231,200 from the 248,200 pace previously reported.

Yet, upward revisions pushed wages higher year over year and increased hours worked. Accordingly, the trend is stronger for both. However, the unemployment rate rose to 3.9%, its highest level in two years, though it’s quite low in a historical context.

The labor market’s resilience reflects a solid, albeit cooling, U.S. economy that should avoid a recession this year (aka soft landing). While it validates the Federal Reserve’s (Fed) patience with respect to cutting rates, this report complicates the timeline of when to cut. We maintain our view that the Fed will reduce rates in the summer, which would ease financing pressures on consumers and businesses alike.

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