US: An underwhelming jobs report with government shrinkage featuring in Feb payrolls – UOB Group

The latest US Employment Situation report by the Bureau of Labor Statistics (BLS) last Fri (7 Mar) was weaker than expected as jobs creation came in below projections with a surprise uptick in the unemployment rate while wage growth was within estimates, UOB Group's Senior Economist Alvin Liew notes. 

US reports a slightly weaker-than-expected jobs creation

"The US reported a slightly weaker-than-expected jobs creation at 151,000 in Feb (versus Bloomberg est 160,000) while unemployment rate also surprised with an uptick to 4.1% (from 4.0% in January). Job creation was still broad-based, but surprisingly, professional services and leisure recorded back-to-back losses, while government hiring slowed visibly as BLS reported that federal employment fell by -10,000 in February."

"After starting the year at a re-accelerating pace, wage growth continued to rise but within expectations at 0.3% m/m, 4.0% y/y in February (from 0.4% m/m, 3.9% y/y in January). "

"No change to our call as we maintain our FOMC view of only one 25-bps cut in 2Q 2025 (likely June FOMC) and then stay on hold for rest of the year at 4.25% (upper bound of Fed Funds Target Rate). Key data to watch will be Feb CPI inflation (12 March) and University of Michigan consumer confidence sentiment for Mar (14 March)."