The US economy saw the strongest job growth in seven months in February, and the unemployment rate fell to its lowest level since the pandemic, signs of a strong labor market ahead of a key meeting of the Federal Reserve.
Employers added seasonally adjusted 678,000 workers to their wages last month, the strongest increase since last July, the labor ministry said on Friday. The unemployment rate, obtained from a separate household survey, fell to 3.8% from 4.0% a month earlier, approaching the pre-pandemic level of 3.5%.
The increase in hourly wages, although still historically high, declined from the previous month and is not in line with inflation. Wages rose 5.1% year-on-year, down 5.5% from the previous month.
Friday’s report offers a snapshot of the labor market in mid-February as the government surveyed households and businesses to find the latest employment data. This moment means that the figures do not show what effect, if any, the Russian invasion of Ukraine in late February and the subsequent rise in oil prices on the labor market had.
Recent figures show that the workforce has grown by 304,000 workers, a potential sign that the effects of the pandemic – such as people unable to work because they were ill or companies reducing their working hours due to the virus – are fading. About 4.2 million people said in February that they were unable to work because their employer had closed or lost business due to the pandemic, which was less than 6 million the previous month.
Job growth has also been stronger in previous months than originally reported, the agency said. The economy added 481,000 jobs in January and 588,000 jobs in December in numbers revised upwards by the Labor Ministry on Friday. The hospitality industry, including hotels, restaurants and resorts, was the leader in all hiring sectors last month, accounting for one in four of all new jobs. But profits were wide, covering office jobs, construction, healthcare and other sectors.
“Today’s Job Report helps build confidence in the sustainability of economic recovery, despite unexpected headwinds,” said Daniel Zhao, senior economist at Glassdoor, in a note to customers.
The report describes the labor market, which continues to grow almost exactly two years after the pandemic hit the United States Mike Fratanthoni, chief economist at the Mortgage Bankers Association, said it supports the Fed’s arguments to start raising interest rates at its mid-day meeting on March. Fed Chairman Jerome Powell told a U.S. House committee this week that he would propose an increase in interest rates at the meeting.
“This report is likely to confirm the latest comments from Federal Reserve officials, who show that they are still planning to raise interest rates at their upcoming meeting in March, despite market volatility stemming from the situation in Ukraine,” he said. Fratanthoni.
However, wage growth has slowed, a potential sign that labor shortages are declining as more people enter the workforce. The average hourly wage of private sector workers has increased by a penny compared to a month earlier, the lowest profit in 13 months. In January, profits rose 19 cents. Meanwhile, the labor force participation rate – the share of people employed or looking for work – rose to 62.3% from 62.2%.
The reduction in unemployment comes from people who have been unemployed for a short period of time. The number of unemployed in less than five weeks fell by 286,000, while the unemployed remained stable for six months or more.
“The job market is still quite hot,” said Nick Bunker, an economist at Indeed. “It seems that the labor market is still prepared for very strong employment growth.”
While viral infections have plummeted since their peak in mid-January, employers say they continue to struggle to find workers as they respond to high levels of household spending. Although some workers have retired in recent months, the workforce remains depleted, with much older workers retiring, immigration declining sharply and some young and middle-aged workers remaining at home.
As the supply of workers is still limited, the labor market may approach – or perhaps be above or above – the level of employment that can be maintained without causing higher inflation.
The inflation-adjusted gross domestic product overshadowed pre-pandemic levels last summer, but employment has not fully recovered.
The United States had 2.1 million, or 1.4 percent fewer, workers in January than in February 2020. Employers hire, but not as fast as they want. Labor shortages and rising wages are two of several factors contributing to rising inflation at the fastest pace in four decades.
The Monthly Job Report reveals key indicators of the labor market and the overall state of the economy, but does not show the whole picture. WSJ explains how to read the report, what it shows and what it doesn’t. Photo illustration: Liz Ornitz
Garn Development is desperate to hire housekeepers and other employees to run its 20 hotels in Utah and several other western states. Reservations at the family-owned hotels have increased by about 60% last year compared to 2020 and continue to increase this year, said operations manager Gabe Garn.
But despite wage increases of an average of 20 percent over the past year, the company is still short of workers, forcing hotel managers to clean rooms, serve food and perform other tasks that are usually reserved for lower-paid employees, he said. Mr. Garn. A large number of workers have recently left soon after they were hired, he said.
“Almost the second you don’t get the schedule you want, you just leave and go find something else because they’re hired everywhere,” Mr Garn said. “Now that we’re interviewing, it’s almost like we’re selling ourselves compared to the way our employee is being sold. Now you have to convince them that you are worthy of them, on the contrary. “
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The labor market poses a dilemma for the Fed. With inflation at 7.5% in February – well above the central bank’s 2% target – the Fed plans to raise interest rates several times this year to prevent the economy from overheating. But politicians want to do so at a modest enough pace to allow job growth to continue.
The unemployment rate peaked after World War II at 14.7% in April 2020. Since then, and especially in the last six months, it has fallen sharply, rapidly approaching the pre-pandemic level of 3.5%, which was 50%. annual low level. In December, the Fed predicted long-term unemployment would be 4%.
The share of workers leaving the work remains close to the highest since the end of 2000, as well as the number of vacancies.
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Three shifts could lead to stronger job growth this spring, economists said. The first is the continuing decline in virus cases. The second is a move – from some states and cities in recent days such as Washington, New York, California and Hawaii – to remove rules that require customers to be vaccinated and wear masks. The third is a potential decline in household savings, which could push people to rejoin the labor market to earn wages, especially as inflation rises and the stock market fluctuates.
Write to Josh Mitchell at [email protected]
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