Construction workers stand in front of the Manhattan skyline and the Empire State Building in New York. The US economy added 3,11,000 jobs last month, down from a revised 5,04,000 figure in January, the Labor Department said. | Photo Credit: AFP
The US economy added jobs at a solid clip in February, likely ensuring the Federal Reserve will raise interest rates longer, even as wage inflation showed signs of cooling.
Nonfarm payrolls rose by 3,11,000 jobs last month, the Labor Department’s employment report showed on Friday. Data for January was revised lower to show 5,04,000 jobs added instead of the previously reported 5,17,000.
Economists polled by Reuters had forecast job growth of 2,05,000. They said the economy needs to create 1,00,000 jobs every month to keep up with the growth in the working age population.
Estimates for February payrolls ranged from as low as 78,000 to as high as 3,25,000 jobs.
The larger-than-expected increase in payrolls suggested that January’s hiring surge was not a mistake.
Economists argued that January’s job growth was flattered by a number of factors, including unseasonably warm weather, annual benchmark data changes as well as the overly generous seasonal adjustment factor, the model used by the government to remove seasonal changes from the data. The robust growth in consumer spending in January was also partially attributed to seasonal factors.
Average hourly earnings rose 0.2% last month after gaining 0.3% in January. That lifted the year-on-year increase in wages to 4.6% from 4.4% in January, in part as last year’s low readings dropped into the calculation.
Fed Chair Jerome Powell told lawmakers this week that the US central bank will likely need to raise rates more than expected. Ahead of the jobs report, financial markets priced in a 50-basis-point rate hike at the Fed’s March 21-22 policy meeting, according to CME Group’s FedWatch tool.
The Fed has raised its policy rate by 450 basis points since last March from near-zero levels to the current 4.50%-4.75% range.
The labor market remained tight, with first-time applications for unemployment benefits remaining very low despite high-profile layoffs in the technology industry.
Data this week showed there were 1.9 job openings for every jobless person in January, while the Fed’s “Beige Book” report described the labor market as remaining “solid” in February, citing “the scattered reports of layoffs” and that “finding workers with the desired skills or experience remained challenging.” Households’ views on the labor market were also quite upbeat last month.
The unemployment rate rose to 3.6% in February from 3.4% in January, which was the lowest since May 1969.
Some economists, however, caution against placing too much emphasis on the narrow measure of the unemployment rate, and instead favor a broader measure of unemployment, which includes people who want to work, but gave up looking for part-time workers because they couldn’t find them. full-time job.
The so-called U-6 unemployment measure was at 6.6% in January, meaning there were 10.9 million people available to work, more than 10.8 million job openings at the end of January, which would suggest the labor market is balance.