The February numbers showed the Labour Force Survey can surprise in more ways than one. Job growth cooled to neutral in February after jumping to start the year. More eye-opening was the strong pace of wage growth.
After slipping over the prior two months, the pace of hourly earnings growth jumped back up above 5% year-over-year. Pay gains were especially strong in two contrasting sectors, accommodation and food, and professional and technical services, highlighting the broad based nature of the shift.
Today’s figures continue the disconnect between ongoing labour market momentum at a time when other indicators have cooled. Flat GDP growth to end 2022, and sliding job postings in recent months both point to a softer labour market ahead. Meanwhile, the unemployment rate remains near its multi-decade low, while softer demand has yet to fully materialize in wage growth. So the waiting game continues, which on the surface is good news. The question is whether inflation will ease, both at home and abroad, amid the job market’s strength.