BND Scope: Issue 22 - Employment Slows for US Economy and Oil Rises

According to the latest figures released by the U.S. Department of Labor, nonfarm payrolls declined by 92,000 in February. After several months of job growth, this reversal drew attention. The unemployment rate also rose to 4.4%, with the most visible losses recorded in manufacturing, construction, and health-related sectors.

One important detail is that wage growth has continued despite weaker hiring. Average hourly earnings increased by 0.4% in February. In other words, while employers appear more cautious about adding new workers, wage levels are not easing. This does not make the Federal Reserve’s job easier; although slower employment supports expectations for rate cuts, wage pressure still requires inflation to be monitored carefully.

Housing finance has remained relatively stable. Freddie Mac data showed the average 30-year mortgage rate holding at 6.0%. Compared with the elevated levels seen over the past two years, this is viewed as a more balanced level, and no new sharp pressure is currently visible in housing finance.

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Oil prices moved noticeably higher during the week. Brent crude rose by roughly 9%, climbing above $91 per barrel. The main driver behind this move was rising geopolitical tension in the Middle East and uncertainty surrounding energy shipments.

When oil prices rise, the impact goes well beyond energy companies. Transportation costs, production expenses, fuel prices, and everyday consumer goods can all be affected over time. For that reason, markets do not treat oil simply as a commodity price, but also as an early signal for broader cost pressure.

The market selloff seen on the same day as the employment release also reflected this energy effect. Demand for Treasury bonds increased, while commodity buying strengthened. In the short term, investors appeared more selective in taking risk.

The first week of March brought several developments in the U.S. that began shaping market direction at the same time. February employment data came in weaker than expected, while oil prices moved sharply higher during the same period. New tax measures and trade policy developments also entered the picture, widening the set of factors investors are now watching closely.

In recent months, economic data alone has not been enough to explain market behavior. Developments in energy, trade, and industrial production are increasingly influencing pricing decisions as well. This week reflected that clearly, with labor market weakness and cost pressures appearing together in the same economic picture.

An Unexpected Weakening in Employment

Oil Prices Continue to Rise

Investment Flows Remain Strong in Selected Sectors

Despite recent volatility, investment activity has not come to a full stop. Capital continues to move into production and technology-related sectors, supported in part by newly clarified policy measures.

New regulations announced by the IRS (Internal Revenue Service) allow businesses to deduct a larger share of first-year production-related investment costs. This is considered especially supportive for factory development and equipment purchases.

At the same time, the newly signed trade agreement between the United States and Taiwan is drawing attention. Semiconductor production, energy purchases, and industrial investment are likely to remain central topics in the months ahead.

At the company level, one of the clearest examples was Marvell. The firm’s shares rose during the week after it announced stronger growth expectations for custom chips used in artificial intelligence infrastructure. Even while broader markets remain volatile, investment in technology continues.

Conclusion

The data released in the opening days of March suggest that parts of the U.S. economy are beginning to slow, while cost pressures have not fully disappeared. The renewed increase in energy prices may bring inflation discussions back to the forefront in the weeks ahead.

The next key question for markets will be whether the recent move in oil prices proves temporary or lasts longer. If energy costs remain elevated, the impact could extend beyond inflation and influence both rate expectations and investment decisions.