The US labour market continued to strengthen in February, but wage pressures eased. The world’s largest economy added 313,000 jobs last month, the strongest gain since July 2016, according to the employment report from the Bureau of Labor Statistics. Economists had anticipated a gain of about 200,000.
Figures for December and January were revised to show the economy adding 54,000 more jobs than previously reported. With those upward revisions, hiring has averaged 242,000 over the last three months. If job growth is sustained it will put downward pressure on the unemployment rate as about 100,000 jobs per month are needed to keep up with growth in the working-age population.
The unemployment rate was unchanged, at a 17-year low of 4.1 per cent, the fifth consecutive month at that level. The jobless rate for black workers fell to 6.9 per cent after jumping nearly a full percentage point a month earlier.
People working part-time for economic reasons rose by 171,000 to 5.16 million. The U-6, or the underemployment rate, was unchanged at 8.2 percent. The measure includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking.
People came back to the labour force last month, a sign of confidence in the jobs market. The labour force grew by 806,000, pushing the labour force participation rate – a gauge of the proportion of the working-age population that is either employed or looking for a job – back up to the 63 per cent, the highest since September, from 62.7 per cent in the previous month, but it remains well below pre-recession rates.
Average hourly earnings increased 2.6 per cent from a year earlier, following a downwardly revised 2.8 per cent gain. January saw the fastest pace of wage growth since the recession, which fuelled inflation worries on Wall Street and sparked jitters in markets on concerns that the Federal Reserve would have to step in and hasten its pace of short-term interest-rate increases (fears about runaway inflation have so far proven unfounded). Average hourly earnings rose 0.1 per cent from the previous month after a 0.3 per cent increase in January. President Donald Trump has said that the $1.5 trillion tax-cuts will spur economic growth and boost jobs and wages.
The average workweek rebounded to 34.5 hours after falling to 34.4 hours in the previous month.
Hiring was strong across the board. Construction companies created 61,000 jobs, the most since 2007. Retail trade employment rose by 50,300. Professional and business services added 50,000 jobs. Employment in the manufacturing sector, which is supported by strong domestic and international demand as well as a weaker dollar, rose by 31,000. Government employment was up by 26,000.
Fed policymakers, who are now considering the jobs market to be near or a little beyond full employment, are widely expected to raise the benchmark interest rate when they meet later this month under the new chairman Jerome Powell. A question is whether the Fed would maintain projections for a total of three quarter-point rate increases this year. Mr Powell said during his congressional testimony last month that his “personal outlook for the economy has strengthened”. His comments stocked speculation that the US central bank would change its rate forecast to four hikes in 2018.
