The Trump economy is absolutely on fire. Every week new records are set.
There were 313,000 jobs added to the US economy in February, far surpassing economists’ forecasts.
Unemployment continued its record low at 4.1% with African-American unemployment dropping nearly a full percentage point.
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A hot labor market showed no sign of cooling as U.S. employers added a blockbuster 313,000 jobs in February, reports USA Today.
The unemployment rate was unchanged at a 17-year low of 4.1%, the Labor Department said Friday.
Economists surveyed by Bloomberg had expected 205,000 job gains. Unseasonably warm weather and light snowfall were expected to boost employment, particularly in industries such as retail, restaurants and construction, Goldman Sachs economists predicted.
“The surge in payrolls was likely exaggerated by weather effects,” says Jim O’Sullivan, chief U.S. economist of High Frequency Economics.
Here’s what the key jobs report showed:
Wage growth slows
Average hourly earnings rose 4 cents to $26.75, slowing the annual increase to 2.6% from January’s 2.9%. The drop suggests that January’s big increase was an anomaly. It was caused by a sharp decline in average weekly hours as a result of harsh weather and a nasty flu season. The typical work week edged back up last month to 34.5 hours.
The jump in January was the largest in nearly nine years. It appeared to signal that the low jobless rate and growing competition among employers for fewer workers was finally leading to stronger wage growth.
What seemed like good news triggered a massive stock market sell-off as investors feared it would prompt faster interest rate hikes by the Federal Reserve to head off excessive inflation. Higher rates for bonds make stocks less attractive.
February’s pullback in wages could ease investor worries and boost markets.
“There definitely are pockets” of faster pay increases, such as in health care, e-commerce and warehousing, says Andrew Chamberlain, chief economist of Glassdoor, the giant job posting site.
He says pay bumps are picking up for some lower-wage workers, including baristas and restaurant cooks. Online services are holding down raises for positions such as loan officers, he says.
More people working, job hunting
One reason pay increases slowed is that 806,000 Americans joined the labor force, which includes people working and looking for jobs. Many were discouraged workers on the sidelines who were drawn back in by a robust labor market.
That trend is healthy for the economy, but it limits raises because it provides employers a bigger pool of job candidates.
The portion of Americans over 16 working or looking for jobs increased sharply, from 62.7% to 63%. The larger labor force kept the unemployment rate unchanged despite booming job gains.
Industries lead the way
Construction led the payroll gains, with a big 61,000 number, signaling that warm weather was a key factor bolstering employment.
Even retailers, which have shed jobs as more people shop online, added 50,000, another sign that warm temperatures may have lured shoppers to the malls.
Professional and business services added 50,000 jobs and education and health care, 23,000.
Manufacturers, which have benefited from a strong global economy and oil sector, added 31,000 positions.
African-American unemployment plunges
After reaching a record low 6.8% in December, the unemployment rate for African Americans spiked to 7.7% in January. The rate fell sharply in February to 6.9%, indicating that January’s big increase was a blip.
What it all means
It’s hard to ask for a better jobs report. The 313,000 jobs added was the most since July 2016. If that wasn’t enough, payroll gains for December and January were revised up by 54,000. What’s more, about 800,000 people, including many on the sidelines, were encouraged to jump into the hot labor market. Sure, wage growth slowed, but it still rose 2.6% annually, which is up from the tepid 2.5% pace of the past couple of years.
The moderation in pay increases eases market fears that accelerating inflation will prompt the Federal Reserve to raise interest rates faster than it anticipates, which would sharply increase borrowing costs for consumers. The report, however, gives the Fed more than enough confidence to hike rates at a meeting this month.