US Employment Growth: Nonfarm payrolls grew by 275k, (but after taking into account downward revisions for December and January, it was 108k). In terms of momentum (3m average/3m average, private payrolls are growing at 1.6% quarterly annualised - a smidge above the non-recession average of 1.5%. More often than not, employment growth below this level precedes a recession. Household employment growth momentum declined by 1.1% in February.
Approaching Normal:
Our measure of total potential demand for labour (household employment plus job openings) vs the labour force shows the excess demand gap closing. Taking an alternative measure of job openings (using NFIB, indeed Job postings, JOLTS), suggests that excess demand for labour could be closer to normalising.
Room To Grow?
The labour force has almost closed the gap between where it would have been with its pre-pandemic participation rate. Most of this tail wind is behind us, however the older demographic has some room to recover. Meanwhile, roughly a third of wage inflation on the year has come from Health services and Leisure & Hospitality. A boom in health care employment continues while employment in leisure and hospitality has trailed off.
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