US labor market data delivered a sharp downside surprise in February as non-farm payroll employment contracted by -92k, far below expectations for a 65k increase. The report marks a significant setback for the labor market outlook and contrasts with the relatively resilient signals from earlier indicators such as ADP and ISM employment data.
The details of the report were also weaker than expected. The unemployment rate rose from 4.3% to 4.4%, while the labor force participation rate slipped by -0.1 percentage point to 62.0%.
In addition, payroll revisions were notably negative, with December’s figure revised down by 65k to -17k and January trimmed slightly to 126k, further highlighting the softening momentum in hiring.
Despite the weakness in employment growth, wage pressures remained firm. Average hourly earnings rose by 0.4% mom, above expectations of 0.3%, while annual wage growth held at a solid 3.8%. The average workweek was unchanged at 34.3 hours.
