U.S. Jobs, Wages Show Solid Gains

U.S. employers added jobs at an above-average pace for a second month on outsized gains in construction and manufacturing, showing the labor market continued its steady growth in the new year.

The 235,000 increase in jobs followed a 238,000 rise in January that was more than previously estimated, the best back-to-back rise since July, a Labor Department report showed Friday in Washington. The unemployment rate fell to 4.7 percent, and wages grew 2.8 percent from February 2016.

While unseasonably warm weather may have boosted the payrolls count, the data represent President Donald Trump’s first full month in office and coincide with a surge in economic optimism following his election victory. The figures also validate recent comments by Federal Reserve officials that flagged a likely interest-rate increase this month.

“The economy is riding a wave of optimism in the wake of the election,” Andrew Chamberlain, chief economist of jobs website Glassdoor, said before the report was released.

Construction jobs, which can fluctuate depending on the weather, rose by 58,000, the most since March 2007, and followed a 40,000 increase in January. Manufacturing payrolls gained 28,000, a three-year high. Meanwhile, retail positions fell by 26,000, the most since December 2012.

Warm Weather

Last month was the second-warmest February on record in the contiguous 48 U.S. states, with an average temperature of 41 degrees Fahrenheit (5 degrees Celsius), about 7 degrees higher than the 20th century average, according to the National Oceanic and Atmospheric Administration.

Even so, the figures indicate that the drivers of consumer spending probably remain intact after purchases slowed in January, suggesting that any easing of first-quarter economic growth will be temporary. Fed Chair Janet Yellen said last week that the labor market is “in the vicinity of our maximum employment objective.”

At the same time, payroll gains are forecast to slow, owing to factors including employers’ difficulty filling positions and tepid growth in the working-age population. For the full year, economists project an average monthly increase of 171,000 jobs, according to a February survey.

Trump has set a goal of adding 25 million jobs over 10 years, which would require additions of 208,000 a month, or 2.5 million positions a year.

The median forecast in a Bloomberg survey of economists called for a 200,000 advance in February. Estimates ranged from gains of 150,000 to 275,000. January was initially reported as a 227,000 increase.

Revisions to the previous two months added a total of 9,000 jobs to payrolls.

The unemployment rate, which is derived from a separate Labor Department survey of households, fell as employment increased by 447,000. The jobless rate matched the median projection of 4.7 percent.

Participation Rate

The participation rate, which shows the share of working-age people in the labor force, increased to 63 percent, the highest since last March, from 62.9 percent. It has been hovering close to the lowest level in more than three decades.

The number of people out of the labor force, a figure repeatedly highlighted by Trump as a sign of economic malaise, fell by 176,000 to 94.2 million.

Private employment, which excludes government agencies, rose by 227,000 after a 221,000 increase the prior month.

Government employment rose by 8,000. Federal payrolls increased by 2,000 in the first full month of the Trump administration’s hiring freeze for agency employees not involved in national security. State and local agencies added 6,000.

Average hourly earnings rose by 0.2 percent from the previous month. January’s year-over-year increase was revised up to a 2.8 percent gain. The average work week for all workers was unchanged at 34.4 hours.

Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.