US job creation exceeds expectations in February; wages rise moderately

The american economy It added jobs at a brisk pace in February, which will likely ensure that the Federal Reserve raises interest rates for longer, although wage inflation showed signs of cooling.

Nonfarm payrolls increased by 311,000 jobs last month, the Labor Department’s employment report showed Friday. Data for January was revised down to show 504,000 jobs added instead of the 517,000 previously reported.

Economists polled by Reuters had forecast a job growth of 205,000 positions. According to them, the economy needs to create 100,000 jobs a month to keep up with the growth of the working-age population.

Estimates for February payrolls ranged from 78,000 to 325,000 jobs.

The higher-than-expected rise in payrolls suggests that the January hiring rebound was not a fluke.

Economists had argued that job growth in January was helped by a number of factors, including unusually warm weather, annual baseline data revisions and overly generous seasonal adjustment factors.

The strong growth of consumption in January was also partly 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, partly because last year’s low readings were left out of the calculation.

Fed Chairman Jerome Powell told lawmakers this week that the central bank probably needs to raise rates more than expected. Before the jobs report, financial markets were pricing 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 benchmark rate by 450 basis points since last March from the near-zero level to the current range of 4.50%-4.75 percent.

He working market has remained tight, with initial claims for jobless benefits remaining very low despite high-profile layoffs in the technology industry.

The unemployment rate rose to 3.6% in February from 3.4% in January, which was the lowest level since May 1969.

Some economists, however, cautioned against putting too much emphasis on the narrow measure of the unemployment rate, favoring instead a broader measure of unemployment, including people who want to work but have stopped looking and those who they work part-time because they cannot find a full-time job.

This so-called measure of unemployment U-6 was at 6.6% in January, meaning there were 10.9 million people available for work, up from the 10.8 million vacancies at the end of January, which would suggest the labor market was in equilibrium.