The Breakdown:

We received some important labor data last week. Of that data, Leisure and Hospitality posted the largest gains but we are seeing some undeniable cracks in the labor sector. In this week's breakdown, we take a look at the Bureau of Labor Statistics (BLS) Jobs Report, the ADP Employment Report, and a brief note on the Fed's Semiannual Monetary Policy Report. Let's dive in!

The BLS Jobs Report showed 311,000 job creations in February and, while it was higher than estimated, the unemployment rate still rose from 3.4 to 3.6%.

The Household Survey portion of the report, where the unemployment rate comes from, showed that the labor force increased by more than 400,000 people last month. In addition, the number of people who recently became unemployed (within the past 5 weeks) increased by over 340,000.

ADP's Employment Report showed that private payrolls were also higher than expected in February, with 242,000 jobs created. Leisure and hospitality posted 83,000 in gains, nearing pre-pandemic levels, which means it is unlikely that these sectors will be supporting the jobs data much longer. ADP stated that "a particular area of weakness is with small establishments, which shed jobs every month since August 2022."

When Jerome Powell met with Congress and presented the Semiannual Monetary Policy Report, he acknowledged that there is still a long road ahead to reach the Fed's goal of 2% inflation and vowed that the Fed will "stay the course until the job is done." Powell hinted at the very real concern of inflation resurging if policy is prematurely loosened as it did in the 70s. The Fed will be meeting again next week and deciding on additional Fed Funds Rate hikes.

This week, we'll be reviewing some key economic data, with the February Consumer Price Index, Housing Starts, and Building Permits data all being reported. Stay tuned for next week's breakdown!

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