Episode summary
Instant Reaction: US Unexpectedly Sheds 92,000 Jobs in Latest Report | Bloomberg Surveillance
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Claudia Sahm, Nadia Lovell, Jennifer Lee
Summary
US payrolls unexpectedly fell by 92,000 in February, the unemployment rate rose to 4.4%, and retail sales for January slipped 0.2%, quickly reviving worries that the labor market and consumer demand are losing momentum. Market reaction was immediate, with futures lower and the VIX jumping, while the discussion centered on whether the report signals a deeper slowdown or just another example of a very unusual, low-growth labor market.
One guest argued that the economy has already been operating in a “jobless expansion” for more than a year, with job creation near zero even as GDP has kept growing. She said the February report does not yet prove recession, but it does show the labor market is not stabilizing and that the unemployment rate’s gradual drift higher still matters. She also pushed back on the idea that weaker job growth is only a supply story, saying the economy does not have enough demand for workers either.
Another guest said the data puts the Federal Reserve back in a difficult position because inflation risks and geopolitical shocks are still present at the same time that employment risks have re-emerged. A third guest said the report was a shock, but not enough to change a base case of no rate cuts until June, and she still expects the U.S. consumer and overall growth to hang in there despite more caution.
Key takeaways
- The February payroll decline of 92,000 was far weaker than the 55,000 jobs expected and pushed unemployment to 4.4%.
- One guest said the U.S. has been in a jobless expansion for over a year, with GDP growing even as net job creation has been near zero.
- Another guest said the report raises employment risk for the Fed, but it is still too early to fundamentally change the outlook.
- A third guest said the market should not overreact to one month of data and still expects the first Fed cut in June.
- Retail sales down 0.2% added to the weak-growth read, even though wage growth remained slightly firmer than expected.
Notable quotes
“the economy lost many more jobs than expected, 92,000 in the month of February”
“we have already been for a year in a jobless expansion so unfortunately what the February data what this latest labor market data suggests is that's still where we're at”
“They're going to keep I mean, this this returns some attention to the downside risks to employment”
“this puts uh you know, the doves on the uh the minority of the do of the doves on the Federal Reserve right back into play”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
I'm Alexis Christopherus and these numbers just crossing the Bloomberg. Now, the Labor Department says the US economy lost 92,000 jobs in February. That is worse than expected.
We were looking at an additional 55,000 jobs. And of course, this is compared to January when we added 130,000 jobs. The unemployment rate ticking up to 4.4%.
The estimate there was 4.3% in the prior month was 4.3%. Checking wages month overmonth up slightly to 4/10en of a percent. Estimates were for 3/10en.
And uh earnings year-over-year also a bit hotter, 3.8% versus the 3.7% expected. But again, the headline here, the economy lost many more jobs than expected, 92,000 in the month of February. Uh estimates were for 55,000.
We also just got retail sales numbers out for the month of January, and they were down 2/10en of a percent versus the estimate of 3/10en of a percent. Uh as for market reaction, uh it is swift. The Dow futures now down more than 400 points.
S&P futures off 64. Guys,
Claudia Sama with us as we continue with uh all of her good work here. These are the kind of numbers, Claudia, where amateurs like me go, "Okay, that means diminished GDP." Is that correct that all of the sun's back to a lesser real GDP where we're on the SAM recession watch?
So, not necessarily. You know, this Okay, so clearly these numbers from February are not in like, you know, checking the box on signs of stabilization in the labor market, right? We're losing jobs. Unemployment rate ticked up. This is not a good sign. This actually sits pretty consistently especially if you look at the last three months with what we saw all of last year.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- jobs report
- unemployment rate
- nonfarm payrolls
- labor market outlook
- health care strike activity
Companies and tickers mentioned
- UBS
- BMO
- Bloomberg
- New Century Advisors
- UBS Global Wealth Management
- BMO Capital Markets
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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