The U.S. economy added jobs at a solid pace in February, possibly ensuring the Federal Reserve will keep raising rates of interest for longer, although wage inflation showed signs of cooling.
Non-farm employment rose by 311,000 jobs last month, a closely watched report from the Department of Labor showed on Friday. January figures have been revised all the way down to show 504,000 jobs added as a substitute of the previously reported 517,000.
Economists polled by Reuters had forecast employment growth of 205,000. They are saying the economy must create 100,000 jobs a month to maintain up with the expansion of the working-age population.
Estimates for February payrolls ranged from as few as 78,000 to as many as 325,000 jobs.
A better than expected increase in the variety of employees suggested that January’s increase in employment was not a coincidence.
Economists argued that January’s job growth was flattered by numerous aspects, including exceptionally warm weather, annual revisions of benchmark data, in addition to overly generous seasonal adjustment aspects, a model the federal government uses to remove seasonal fluctuations from the information. The strong rise in consumer spending in January was also partly as a consequence of seasonal aspects.
Average hourly earnings rose 0.2% last month after rising 0.3% in January. This pushed wage growth year-on-year to 4.6% from 4.4% in January, in part because last yr’s low readings fell out of the calculations.
Fed Chairman Jerome Powell he told lawmakers this week that the US central bank will probably need to raise rates of interest more than expected. Ahead of the jobs report, financial markets had priced in a 50bps rate hike on the Fed meeting on March 21-22, based on CME Group’s FedWatch tool.
The Fed raised its key rate by 450 basis points since last March from near zero to its current range of 4.50-4.75%.
The labor market stays tight and first-time unemployment claims remain very low, despite high-profile layoffs in the tech industry.
This week’s data showed up there there have been 1.9 vacancies for each unemployed person in January, while “Beige Book” Fed the report described the labor market as “solid” in February and noted “scattered reports of layoffs” and that “finding employees with desired skills or experience continued to be a challenge.” The perception of the labor market by households was also quite optimistic last month.
The unemployment rate rose to three.6% in February from 3.4% in January, the bottom rate since May 1969.
Nevertheless, some economists have cautioned against placing an excessive amount of emphasis on the narrow scale of unemployment and favored a broader measure of unemployment, including those that wish to work but have given up looking, and people who work part-time because they can’t find full-time employment.
This so-called U-6 unemployment measure was 6.6% in January, meaning 10.9m people were available, up from the ten.8m job vacancies at the top of January, which might suggest that the labor market is in balance.