The US economy continues to add jobs at a rapid pace, beating analysts expectations in February, but the figures skewed a bit higher due to some distorsion from seasonal adjustment factors
Washington (AFP) - The US employment engine roared in February, adding more new jobs than any month in more than a year as robust hiring picked up in construction, retail and manufacturing, the government reported Friday.
The result shattered economists’ expectations, giving President Donald Trump a shot in the arm just as support for his “America First” economic agenda appeared to be on shaky ground.
Trump broke with the leaders of his own Republican Party this week, announcing steep tariffs on steel and aluminum imports.
The move was denounced by top congressional leaders and drawing rebukes from industry, who said it could undermine the benefits of December’s sweeping tax cuts and spark a global trade war.
On Twitter, an elated Trump wrote: “JOBS! JOBS! JOBS!” adding the hashtag “#MAGA” to invoke his campaign trail slogan: “Make America Great Again.”
US stocks rallied on the news, with the benchmark Dow Jones Industrial Average soaring more than 400 points to add 1.8 percent. Last month, a jump in hourly pay from the same report had sparked a global selloff.
For Wall Street, the news appeared to hit a sweet spot, pointing to an economy in rude health but not to a pickup in the pace of rising worker wages, which can cause inflation – and invite quicker interest rate hikes.
Employers added 313,000 net new non-farm jobs last month, the biggest monthly increase since July 2016, while the unemployment rate remained steady at 4.1 percent for the fifth month in a row, according to the Labor Department’s highly anticipated monthly report.
On top of the exceptionally strong February, the job gains in December and January were revised up by a combined 54,000, bringing average monthly job creation to a strong 242,000 a month for the latest three months.
The unemployment rate remained steady even though more workers joined the job hunt, lifting the labor force participation rate up to 63 percent.
Hourly wages gained 0.2 percent in the month, matching analyst expectations but putting compensation up 2.6 percent over the same month last year – ahead of consumer inflation of 2.1 percent.
- A ‘Goldilocks’ report for markets? -
The goods-producing sector, including mining, manufacturing and the auto sector, added 100,000 new positions while the services sector added 187,00 jobs.
The public sector gained 26,000, with hiring added in education and at the state government level.
But, the Labor Department noted that gains in the clothing and general merchandise retail sectors, which added 33,000 new positions, suffered some distortion that made the gains appear stronger.
Clothing and general merchandise retailers hired less than they were expected to before the holidays but afterwards laid off fewer workers than expected, resulting in apparent gains for the sector after seasonal adjustment, the report said.
As a result, over the past four months, “employment in these industries has changed little on net,” William Wiatrowski, acting commissioner of the Bureau of Labor Statistics, said in a statement.
But there also were signs the hunger for increasingly scarce workers was causing companies to dig deeper into the labor pool.
The number of discouraged workers or those marginally attached the labor market – such as people working part time who want a full-time position – fell 149,000 from a year earlier to 373,000.
Still, economists said the report does not fuel fears of runaway inflation.
“In a nutshell, the tax cuts are already boosting hiring, but as long as it’s not causing wages to accelerate or the unemployment rate to drop, why worry?” Chris Low of FTN Financial said in a client note.
“That’s the way the Fed is likely to see it too.”
In recent speeches, Fed officials have indicated that the economy can continue to add jobs without inflation becoming a concern, but say they are watching the situation closely.
The central bank is expected to raise the benchmark interest rate later this month, and at least twice more this year, but many economists now expect four rate hikes in 2018.
Diane Swonk, chief economist at Grant Thornton, said that after 89 months of uninterrupted job growth, the result appeared to be one of the best of the current recovery.
But it offered “a false picture of a ‘Goldilocks’ economy” for financial markets, she said in a research note.
Anecdotal reports suggest worker pay is indeed beginning to rise.
“It is only a matter of time before we see more sustained increases in wages,” she wrote.