The U.S. economy added the biggest number of jobs in more than 1-1/2 years in February, but a slowdown in wage growth pointed to only a gradual increase in inflation this year. Nonfarm payrolls jumped by 313,000 jobs last month, boosted by the largest rise in construction jobs since 2007, the Labor Department said on Friday.
The payrolls gain was the most since July 2016 and triple the roughly 100,000 jobs the economy needs to create each month to keep up with growth in the working-age population. Data for December and January were revised to show the economy creating 54,000 more jobs than previously reported.
The labor market is benefiting from strong domestic demand, an improvement in global growth, and robust U.S. business sentiment following passage of the Trump administration’s $1.5 trillion tax cut package. The tax cuts came into effect in January. The blowout payrolls number cemented expectations the Federal Reserve will increase interest rates at its March 20-21 policy meeting. Sluggish wage growth, however, left economists divided on whether the U.S. central bank would upgrade its rate forecast for this year to four hikes from three. “While the employment gains unequivocally suggest underlying strength in the economy, wage gains remain muted enough for the Fed to continue with an only gradual normalization of the policy stance. Stock markets are reacting accordingly,” said Harm Bandholz, chief U.S. economist at UniCredit Bank in New York. Average hourly earnings edged up four cents, or 0.1 percent, to $26.75 in February, a slowdown from the 0.3 percent rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6 percent from 2.8 percent in January. The unemployment rate was unchanged at a 17-year low of 4.1 percent in February for a fifth straight month as 806,000 people entered the labor force in a sign of confidence in the job market. The average workweek rebounded to 34.5 hours after falling to 34.4 hours in January.
An even broader gauge of labor market health, the percentage of working-age Americans with a job, increased to 60.4 percent last month from 60.1 percent in January. Employment gains were led by the construction sector, which added 61,000 jobs, the most since March 2007. Hiring at construction sites was likely boosted by unseasonably mild weather in February. Manufacturing payrolls increased by 31,000 jobs, rising for a seventh straight month. Retail payrolls jumped by 50,300, the largest increase since February 2016. Government employment increased by 26,000 jobs last month, with hiring of teachers by local governments accounting for the bulk of the rise. There were also increases in payrolls for professional and business services, leisure and hospitality as well as healthcare and social assistance. Source https://www.reuters.com/article/us-usa-economy/u-s-economy-creates-313000-jobs-in-february-wage-growth-slows-idUSKCN1GL0IZ
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