US: Labor market remains incredibility tight – Wells Fargo
|Data released on Friday showed the US economy added 311K new jobs in February, surpassing expectations. Analysts at Wells Fargo point out that while hiring remained on a roll, there were hints that strong job growth need not come at the expense of fanning inflation pressures. They see the Federal Reserve remaining in tightening mode.
Solid hiring continued in February, but slowdown in store
“But at 3.6% unemployment, the jobs market incredibly tight. We are therefore wary to extrapolate the degree of easing in earnings growth over the past year, which was likely helped along by the restaffing and job-switching frenzy after the initial phase of COVID dying down. With labor still in fairly short supply, wage pressures are likely to remain elevated in the near term.”
“Even with February's increase in the unemployment rate, the labor market remains incredibility tight. While we expect hiring to slow more markedly from here, there remains plenty of scope for the jobs market to weaken before concerning the Fed.”
“We expect the FOMC to remain in tightening mode awhile yet, with the bar for a 50 bps hike at the upcoming March meeting looking somewhat higher after today's report showing some easing of inflation pressures coming from the jobs market.”
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