The U.S. added 311,000 positions in February, surpassing economist predictions of 205,000, according to the Bureau of Labor Statistics’ Nonfarm Payrolls report. The jobless rate rose to 3.6%, compared to anticipations of holding steady at 3.4%.
January’s extraordinary job gain of 517,000 was revised down to 504,000.
Having dropped almost 8% in the 24 hours prior to Friday morning’s jobs numbers, bitcoin (BTC) is now recovering moderately following the report, returning to just over $20,000.
Friday’s jobs report has taken on exceptional importance in the wake of recent events. First, Federal Reserve Chairman Jerome Powell suggested earlier this week that the U.S. central bank may need to get more aggressive in tightening monetary policy to fight persistent high inflation. Next, on Wednesday night, crypto-lender Silvergate Bank crashed.
While the Silvergate failure didn’t incite much worry outside of cryptocurrency circles, it was quickly followed by a plunge in the stock price of SVB Financial (SIVB), the holding company of tech-friendly lender Silicon Valley Bank (down 60% on Thursday and down another 60% in premarket trading on Friday). The banking sector – as represented by the SPDR S&P Bank ETF (KBE) – plunged 7.3% on Thursday.
The word “contagion” has now re-entered the Wall Street lexicon, with investors wondering if it’s not crypto or tech that’s the problem but whether the past year’s surge in interest rates has left the banking sector with sizeable losses in their bond portfolios.
Looking at another key metric from February’s payrolls report, average hourly earnings increased by 0.2%, lower than 0.4% in January and softer than expectations of 0.3%. Year-over-year, wages were up 4.6%, compared to 4.4% in January.
Regardless of the rise in unemployment, February’s 311,000 job gain (and only a marginal downward revision to the January report) is likely to keep the pressure on the Fed to carry on hiking rates, which in turn could be a continuous headwind for the banking sector and for bitcoin.
CORRECTION (March 10, 2023, 13:43 UTC): Corrects jobs report month to February.