The US job market has once again disappointed.
Employers in the country added as many as 311,000 jobs last month, the government reported on Friday, easily outpacing the 208,000 increase forecast by forecasters.
The latest evidence that corporate demand for workers remains strong complicates things for the Federal Reserve’s inflation fighters. They want to see clear signs that the economy and job market are cooling before considering easing rate hikes. .
This is because the stronger the job market, the more likely employers are to raise wages and pass on those higher costs to customers by raising prices.
“The labor market remains very tight and is unlikely to slow further in the coming months given the recent strength in employment activity,” said Thomas Feldmeit, senior economist at TD Economics.
Still, the unemployment rate rose in February and hourly wages rose only marginally from January. If these trends persist, the Fed can rest assured that inflation will ease.
Here are five takeaways from the February jobs report:
Job Market Remains Strong
2021 and 2022 are set to be the best for jobs in terms of pure jobs created, according to government records dating back to 1940, reflecting the explosive recovery from the 2020 COVID-19 recession. It was the year
The labor market was expected to weaken when the Fed raised its benchmark interest rate (8 times over the past year) to combat resurgent inflation. it’s not. Employers said in January he added 504,000 jobs and last month he added more than 300,000 jobs. This is a strong increase indicating a high demand for labor.
Many companies that ran into labor shortages when the economy began to recover are now willing to let go of workers in the face of rising borrowing costs and fears that the economy is headed for recession. reluctant to An increase in entrepreneurship is also playing a role in pushing up labor costs.
Earlier this week, the government reported that employers posted 10.8 million job openings in January. The figure was down from his 11.2 million in December, but it was the 20th straight month that vacancies exceeded his 10 million. The government’s data to 2000 show him a level never reached by 2021.
“The economy is still adding jobs rapidly,” said Stephen Stanley, chief US economist at Santander US Capital Markets.
modest wage increases
Average hourly wages rose by just 0.2% in February. However, compared to the previous year, his hourly wage rose by 4.6%. It surpassed the 4.4% year-on-year increase in January.
Higher wages tend to fuel inflationary pressures through a self-perpetuating cycle that triggers higher prices, which can lead to even higher wages.
“Annual wage growth is well above the roughly 3.5% that the Fed sees as consistent with its 2% inflation target,” said Nancy Vanden Houten, chief U.S. economist at Oxford Economics.
And ordinary workers (employees in production and non-supervisory positions, in Labor Department parlance) enjoyed greater hourly wage increases.
rising unemployment
The unemployment rate rose to 3.6% last month from 3.4% in January, the lowest level since 1969.
However, the unemployment rate edged higher in February for encouraging reasons. More Americans started looking for work, and some didn’t find one right away. As a result, these new job seekers were counted as unemployed. The Labor Department’s unemployment rate includes only those actively looking for work.
Overall, 419,000 people started looking for work last month. Over the past three months, 1.7 million have done so. The share of adults who have a job or are looking for a job, the so-called labor force participation rate, rose to 62.5% last month, the highest level since March 2020.
Vanden Houten of Oxford Economics called the rise “a welcome development as the Federal Reserve seeks to improve the balance between supply and demand for labor.”
The share of the working-age American population aged 25 to 54 in their prime rose to 83.1%, falling below the pre-pandemic level of 83% in February 2020 for the first time in three years.
Assistance at hotels, restaurants and bars
Leisure and hospitality companies added a significant 105,000 jobs last month. In particular, restaurants and bars saw an increase of nearly 70,000 people. Salaries at these companies are approaching pre-pandemic levels.
The hotel added more than 14,000 employees, but still 238,000 — 11% below its February 2020 figure. last year.
Unemployment rises in all racial groups
Last month’s rise in unemployment rates spanned across demographic groups. The unemployment rate for white workers rose from 3.1% to 3.2%. For blacks, it went from 5.4% to 5.7%. Also, the unemployment rate for Hispanic workers rose from 4.5% to 5.3%.
In February, 63.4% of black Americans were working or looking for work, the highest labor force participation rate since 2008.
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