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US Job Growth Surges In February

Job creation in the US economy surged last month, but the annual rate of wage growth slowed. The economy created 313,000 jobs in February, official figures show, far in excess of analysts’ expectations.

US Job Growth

However, the unemployment rate remained at 4.1%, while the annual earnings growth rate slowed to 2.6% last month.

January’s annual wage growth rate – which had triggered fears over inflationary pressures – was also revised down from 2.9% to 2.8%.

The strong wage growth figure for January prompted sharp volatility on the stock market, as investors worried the US Federal Reserve would quicken the pace at which it increased interest rates.

‘Firing on all cylinders’

Despite a lower-than-expected wage increase in February, many economists said longer term trends still point to higher wages.

The US economy is in its ninth year of economic expansion, with an upswing in global growth and tax cuts passed last year helping to boost growth.

Friday’s report from the US Labor Department showed the biggest increase in jobs since July 2016, sending major stock indexes higher.

The three major US stock indexes climbed almost 2% by the close of trading and the Nasdaq closed at a record high.

The Dow Jones Industrial Average rose 440 points, or 1.77%, to end at 25,335, the S&P 500 gained 47 points, or 1.74%, to 2,786 and the Nasdaq ended up 132 points, or 1.79%, to 7,560.

“We have an economy that is firing on all cylinders and the job market is a reflection of that,” said Gus Faucher, chief economist at PNC Bank.

February’s gains included an increase of 61,000 construction jobs – the biggest rise since 2007. The Manufacturing Job sector also added 31,000 jobs, while retail employment rebounded from declines last year.

But Ms Koropeckyj said she does not expect the labour force to continue growing at last month’s pace, pointing to challenges such as skill gaps and opioid addiction.

Americans are also moving less, fuelling a geographic mismatch between jobs and job seekers and hardening regional disparities.

“There’s only so much of a boost you can get because a lot of people are structurally unemployed,” she said. “Certainly there is slack, but how much of it will be practically absorbed is questionable.”

Rate rise ahead?

Ms Koropeckyj said a tighter labour market makes slow acceleration in wage growth “inevitable” this year.

The average hourly wage for private sector workers was $26.75 last month, up 68 cents from February 2017 and 4 cents from January.

Markets are expecting the Federal Reserve to raise interest rates at least three times in 2018. But with the inflation rate lagging its target 2% rate, it has been waiting for signs – like strong wage growth – of pricing pressure.

Analysts said strong hiring in February all but guarantees the Fed will raise rates at its meeting later this month, even if the figures were boosted by mild weather. But the relatively weak wage growth did little to resolve debates about whether policymakers will eventually move faster.

Tony Williams
Tony Williams
Tony Williams is a seasoned journalist with over 10 years of experience covering a wide range of topics, from local news to international events. With a keen eye for detail and a passion for uncovering the truth, Tony has won numerous awards for his investigative reporting. He holds a degree in journalism from the University of California and has worked for several top-tier newspapers. Tony is known for his tenacity and commitment to delivering high-quality journalism to his readers, and he is widely respected in the industry for his integrity and professionalism.
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