U.S. hiring surged in February, boosting odds of a Fed rate hike
Giving ammunition to the Federal Reserve to boost interest rates this month, the U.S. economy added a stronger-than-expected 235,000 jobs in February, as the already-low unemployment rate ticked downward.
The report, issued by the U.S. Labor Department’s Bureau of Labor Statistics on Friday, is a sign that hiring is remaining steady seven years after the recession ended. The trend has been especially healthy lately. Over the past six months, the economy has added an average 180,000 jobs monthly. Forecasters expected payroll gains of around 200,000 last month, so the latest figures show the labor market is in good shape.
The impact of the BLS report on the Fed is key. This is the last major economic report Fed policymakers will view before their March 14-15 meeting, when they have broadly hinted they plan to raise short-term interest rates by a quarter percentage point, part of a reversal from rock-bottom rates kept in place to heal the economy after the Great Recession.
“The number was healthy and opens the door for the Fed next week,” said Crit Thomas, global marketing strategist at mutual fund house Touchstone Investments.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, termed it a “solid report, though payrolls and wages didn’t quite scale the heights we were hoping for. But it is more than good enough and it guarantees a rate hike next week, barring an asteroid strike on Washington.”
The unemployment rate edged down to 4.7 percent, from 4.8 percent in January, while the number of jobless people stood at 7.5 million, little changed from the month before. Just as important, last month the average hourly earnings rose 6 cents to $26.90, representing a 2.8 percent rise from 12 months before, and the hours worked was unchanged at 34.4.
The labor participation rate, which measures how much of the potential workforce is employed, inched up to 63.0 percent from 62.9 percent in January -- still down from historically higher levels of around 67 percent in the 1990s. Some ascribe the long-term drop to retiring baby boomers, in part. Still, the precipitous slide has plateaued over the past two years. “The decline in labor force participation rate seems to have bottomed out,” tweeted David Wessel, director of the Hutchins Center on Fiscal & Monetary Policy, part of the Brookings Institution
The robust BLS employment report was presaged by the ADP National Employment Report released Wednesday, which measures private payrolls. It found that employers added 298,000 positions in February, an enormous increase over the analysts’ consensus number of 189,000. The ADP survey and the government one seldom match but often go in the same general direction.
The BLS found that employment rate for prime-age workers -- that is, those 25-54 years old -- hit 78.3 percent in February, a new high for the recovery, noted Dean Baker, co-director of the Center for Economic and Policy Research. “This rise is noteworthy,” he said, “since it suggests that there are more workers being pulled into the labor force as the recovery continues, even as the unemployment rate has remained relatively stable.”
There were some discordant notes, however. Construction and manufacturing displayed healthy increases in jobs, and the plight of factory workers beset by a long trend of layoffs is now a political issue. “Both are tied to better weather and strange seasonal factors, not necessarily to overwhelmingly powerful base effects,” said Robert Johnson, director of economic analysis at research firm Morningstar.
