US payrolls rebound, despite bad weather : Capital Economics The rebound in US payroll employment in February, to 175,000 from 129,000 in January, pretty much guarantees that the Fed will taper its asset purchases further at the mid-March meeting, especially as payrolls would have been stronger if it wasn’t for the unusually severe weather. After all, we know from the alternative household survey that 601,000 people could not get to work due to the bad weather, which is double the norm for February. And the number of weekly hours worked dropped to 34.2, from 34.3. Finally, the weather surely explains why retail payrolls fell by 4,000, which followed a 23,000 decline the month before. We’re not too considered by the small 42,000 rise in the household measure of employment as this just followed a huge 638,000 gain in January. Together with a 264,000 rise in the labour force, this pushed the unemployment rate up to 6.7%, from 6.6%. This took it slightly further away from the Fed’s 6.5% threshold. Nonetheless, the trend remains down and the Fed clearly needs to drop that threshold and update its forward guidance at the mid-March policy meeting. Overall, if the economy managed to generate 175,000 new jobs in a month when the weather was so severe, once the weather returns to seasonal norms payrolls employment growth is likely to accelerate further.
Posted on: Fri, 07 Mar 2014 14:40:33 +0000
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