Intro
In February, total nonfarm payrolls increased m/m by 151,000, the unemployment rate remained low at 4.1%, and real average hourly earnings accelerated y/y to 1.2%, according to data from the U.S. BLS. Over the next few months, there will be a few areas to monitor on the labor side as potential implications related to changes/expected changes in policy make their way into the data.
Labor Market
The Signals:
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- Total Nonfarm Payrolls (Chart 1)
- Headline payroll growth from the Current Employment Statistics report from the BLS came in at 151,000, up from a downwardly revised 125,000 in the prior month.
- Overall, total payrolls remain below their 2015 to 2019 trend, and while there are several payroll dynamics to watch in 2025, the path of government hiring and the native-born/foreign-born payroll mix will likely garner more attention as the implementation of current policy proposals would likely impact the trajectory of this data.
- Headline payroll growth from the Current Employment Statistics report from the BLS came in at 151,000, up from a downwardly revised 125,000 in the prior month.
- Government Payrolls (Chart 2)
- The government sector added 11,000 jobs in February, down from 44,000 in the prior month, but still accounted for 20% of the y/y change in value for total nonfarm payrolls.
- While we tend to focus on private sector job growth, a policy-induced slowdown in the Government space from the elevated 2023 and 2024 levels would likely weigh on headline hiring data.
- The government sector added 11,000 jobs in February, down from 44,000 in the prior month, but still accounted for 20% of the y/y change in value for total nonfarm payrolls.
- Native-Born/Foreign Born (Chart 3)
- In a separate report, the Household Survey from the BLS, we saw that the majority of hiring in 2024 came from foreign-born workers.
- A reversal of this trend in 2025, due to policy changes, would likely put downward pressure on headline payroll data.
- In a separate report, the Household Survey from the BLS, we saw that the majority of hiring in 2024 came from foreign-born workers.
- Real AHE & UR (Chart 4)
- Real average hourly earnings accelerated to 1.2% y/y in February (4.0% nominal), and the unemployment rate remained low despite ticking up by one-tenth of a percentage point to 4.1%.
- In relation to their 2015 to 2019 averages, real earnings are in line at 1.2% and the unemployment rate is three-tenths of a percentage point lower.
- Real average hourly earnings accelerated to 1.2% y/y in February (4.0% nominal), and the unemployment rate remained low despite ticking up by one-tenth of a percentage point to 4.1%.
- Total Nonfarm Payrolls (Chart 1)
The Takeaway:
- Payroll growth has been bouncing around the 2015 to 2019 average over the last six months, and while Government policies may put downward pressure on a few areas that had been positive contributors to payroll growth, we will remain focused on private sector activity alongside consumer earnings growth and the unemployment rate which have yet to show signs of material weakness.
Visuals:
(Chart 1)
(Chart 2)
(Chart 3)
(Chart 4)
Source: Macrobond
Market Trends:
Source: Macrobond
The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance. The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.
Investment Strategist
Boyd Watterson Asset Management, LLC