Guotai Haitong: Why did non-farm job growth turn sharply negative?

Guotai Haitong released a research report stating that in February, the number of new non-farm jobs in the United States significantly turned negative, and the unemployment rate unexpectedly rose to 4.4%. However, the non-farm data for January and February were greatly disturbed by technical factors, and there is not yet a sign of a sustained rise in the unemployment rate, which may have limited impact on the market and Federal Reserve decisions. In the short term, the evolution of the situation in Iran and whether oil prices will continue to remain high are more important factors affecting market sentiment. Guotai Haitong's main points are as follows: Non-farm employment: Why did it fall beyond expectations In February 2026, the number of new non-farm jobs in the United States was -92,000, significantly lower than the market's expected 55,000. Looking at the industry structure, the largest decrease in employment numbers was in the education and healthcare industries, which is the main reason for the significant fluctuations in non-farm new jobs in the past two months. On one hand, in February, over 30,000 employees of the Kaiser Permanente health group went on strike, causing a certain negative impact on employment numbers. On the other hand, adjustments to the birth-death model may also have exaggerated the fluctuations in non-farm data for January and February. However, other employment data do not reflect significant risks of weakening in the US job market. Excluding the impact of technical factors and strikes, the actual employment situation may not be as weak as reflected by the February non-farm employment numbers. Unemployment rate: Unexpected rise In February, the US unemployment rate rose to 4.4%, exceeding the market's expected 4.3%. The rise in the unemployment rate occurred as the labor force participation rate fell. The labor force participation rate fell to 62% in February, significantly lower than the market's expected 62.5%. Temporary unemployment and re-entrants were the main reasons for the rise in the unemployment rate. However, the current unemployment rate of 4.4% is still within the range predicted by the Federal Reserve, and there is no sign of a sustained upward trend. Additionally, the U6 unemployment rate fell from 8.0% in January to 7.9%, which may reflect a relative improvement in the employment situation of the marginal groups in the US. Oil prices may be the main focus of the short-term market Overall, the February US employment data did not cause much concern in the market. Compared to non-farm data, the evolution of the situation in Iran and whether oil prices will continue to remain high may be more important factors affecting market sentiment. If the situation in Iran continues to escalate, leading to a long-term high in oil prices causing a significant rebound in inflation expectations, it may exert certain pressure on the Federal Reserve's pace of interest rate cuts. Risk warning: Escalation of the situation in Iran leading to long-term high oil prices.