February Jobs Report Commentary from MBA's Joel Kan

The following is MBA VP and Deputy Chief Economist Joel Kan’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in February.  

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“February’s employment numbers showed slower job growth, primarily in the lower wage services sectors of the economy, which accounted for 245,000 of the 311,000 jobs gained. Growth in industries such as retail, leisure, and hospitality are still reflecting a catch up from the pandemic.

“Fed Chair Powell communicated earlier this week that incoming data on the U.S. economy continues to show strength and that a higher level of interest rates, and potentially for a longer period of time, is likely needed to cool inflation. On net, this report does show some slowing, particularly with respect to the breadth and the amount of job growth.

“Wage growth, as measured by average hourly earnings, slowed in February, but the year-over-year rate of 4.6 percent is still strong as job openings remain elevated and companies seek to fill these open positions.

“The unemployment rate increased to 3.6 percent, partly driven by another increase in labor force participation, but remained well below historical averages. We expect the unemployment rate to increase over the course of this year as the economy cools, reaching 4.8 percent at the end of the year.

“The housing market typically benefits from strong employment conditions, but as monetary policy has tightened to combat inflation, bringing about higher rates and tighter financial conditions, homebuyers have pulled back over the past year. We expect the economy to go into a mild recession this year, and with that a cooling in home prices and lower mortgages rates, which should help affordability conditions and bring a gradual recovery in housing activity.”