MACRO: Private sector job growth rise solidly in February

Today's ADP report showed private sector employment surged by 475k jobs in February compared to analysts’ expectations of 388k rise. What's interesting, January data was revised significantly higher from a loss of 301k to 509k gain and some economists raised concerns about the report’s credibility. The service-providing sector added 417k jobs, led by leisure & hospitality (170k), trade, transportation & utilities (98k), professional & business (72k), and education & health (40k). The goods-producing sector added 57k jobs, boosted by rises in manufacturing (30k) and construction (26k). Large companies added 552k payrolls and midsized 18k while small companies cut 96k as this group is hardest hit by rising inflation and expectations for higher wages among employees. 

Today's report marked the 14th straight month of job gains, which at first glance indicates the economy is getting stronger as the winter wave of omicron infections turned out to be less severe than expected. However small businesses took a hit in February and Services jobs dominated the gains. Source: Bloomberg via ZeroHedge

Tightening labor market conditions and president Biden's plan to raise minimum wages to $15 may become additional sources of the inflation pressures. Fed Chair Powell told lawmakers on Wednesday that the U.S. central bank would move forward with plans to raise interest rates this month, but Russia’s war against Ukraine had made the outlook “highly uncertain.”

Therefore, some investors believe that despite the improvement in the labor market and rising inflation, the FED may use Russia's continued aggression against Ukraine as an excuse to raise interest rates at a slower pace.