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US February employment key takeaways

Zdjęcie autora: Jarosław JamkaJarosław Jamka

A month ago, when commenting on the January employment data, I suggested not to trust the data (link: https://www.jamkaglobal.com/post/subjective-market-review-3-feb-2024 ) and this turned out to be dead on accurate… just look at strong revisions of the January data (downward change in payroll employment from 353k to 229k).


But the market usually reacts to "nominal" data anyway. Just look at the change in 10Y yield after the publication of January data (Figure 5).


The employment report contains a very large amount of various data and statistics that can be analyzed for hours. But not to lose the big picture, from the point of view of market reaction - 80% of the contribution is made up of only three data points:

(1) the increase in the number of payroll jobs,

(2) wage inflation and

(3) the unemployment rate.


The remaining countless data can/should also be analyzed, but should generally fit into the remaining 20% of market impact.


Below is a summary of key data for February:

1) Payroll job growth is strong (hawkish), +275k in February, 3m av. +265k – see Figure 1;

2) Wage growth has slowed down (now neutral, after being strongly hawkish last month); Figure 2 and 3.

3) The unemployment rate has jumped to 24-month high (dovish/strongly dovish) - Figure 4.






I present a summary of employment data in a chart showing the change in 10Y yield – see Figure 5.


“Net net” the employment data is neutral/goldilocks-like. What's next? The market's attention will now shift to inflation for February - publication on Tuesday, March 12. Headline CPI is expected to rise +0.4% M/M in February (prev. +0.3%), while the core rate of inflation is expected to rise +0.3% M/M (prev. +0.4%). Cleveland FED inflation nowcast indicates headline CPI at +0.43% M/M and core +0.32% M/M.



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