- Non-agricultural wages increased by 678,000 in February
- The unemployment rate falls to 3.8% from 4.0%
- Average hourly wage flat; increases by 5.1% on an annual basis
- The average working week increases to 34.7 hours
WASHINGTON, March 4 – US employment growth accelerated in February, pushing unemployment to its lowest level of 3.8% in two years and raising optimism that the economy could withstand growing tensions from geopolitical tensions. , inflation and tighter monetary policy.
The Ministry of Labor’s closely monitored employment report on Friday also showed that the economy had created 92,000 more jobs than originally estimated in December and January. This suggests that the labor market is moving alongside the COVID-19 pandemic and that the economy has weaned itself off public money.
Although average hourly earnings were equal last month, this is due to the return of workers in lower-paid industries and a deviation from the calendar. Companies are raising wages to attract scarce workers, which is contributing to higher inflation.
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Economists said that in the absence of Russia’s war against Ukraine, which has raised oil, wheat and other commodity prices, a strong employment report would push the Federal Reserve to raise interest rates by half a percentage point later this month.
“Overall, despite wage weakness, this is another long line of reports suggesting that the Fed should have started raising interest rates many years ago,” said Chris Lowe, chief economist at FHN Financial in New York. “The Fed will not work if it wants to slow down demand enough to stabilize the unemployment rate at 4%.”
A survey of businesses showed that wages in non-agricultural sectors jumped 678,000 jobs last month, leaving employment at 2.1 million jobs below pre-pandemic levels. Economists expect all lost jobs to be restored by the third quarter of this year.
Non-agricultural wages
Fed Chairman Jerome Powell this week described the labor market as “extremely tight” and told lawmakers he would support a 25-point increase in interest rates at the March 15-16 meeting of the US Federal Reserve. Economists expect up to seven interest rate hikes this year. Read more
Employment growth was stimulated by the attenuation of Omicron variants of the COVID-19 variant. At least 1.6 million people said they were out of work last month due to illness, a sharp drop from a record 3.6 million in January.
Economists polled by Reuters predicted that wages would rise by 400,000 jobs, with estimates ranging from 200,000 to 730,000. The broad increase in employment in February was driven by the leisure and hotel industry, one of the most severely affected by the Omicron variant.
Salaries for recreation and hospitality increased by 179,000 jobs. Employment in restaurants and bars increased by 124,000, while hotels and motels added 28,000 workers. Employment in the professional and business services industry increased by 95,000 jobs.
Retailers added 37,000 jobs. The payroll in manufacturing increased by 36,000 jobs, while employment in construction increased by 60,000. Employment in government increased by 24,000 jobs.
However, the report was overshadowed by the war between Russia and Ukraine. Shares of Wall Street fell sharply at the start of trading before offsetting some losses as the dollar rose against a basket of currencies as investors sought safe haven. US government bond yields have fallen.
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Russia’s invasion of Ukraine has led to a rise in oil prices above $ 100 a barrel, which will keep US inflation at bay for some time and hurt consumer spending in the near future.
The unchanged reporting of the average hourly wage followed an increase of 0.6% in January. The data for the employment report are collected during the week, including the 12th of the month.
“There’s a very well-established pattern where the 15th of the month falls on a Saturday, which usually raises the average hourly income this month and falls the following month,” said Robert Rosener, a senior economist at Morgan Stanley in New York. “That was in January, when the 15th of the month fell on a Saturday … and February was expected to show some payoff, which will pull the figure down.”
Wages rose 5.1% in the 12 months to February after rising 5.5% in January. Wages of production and unsupervised workers increased by 0.3% compared to January.
The average working week rose to 34.7 hours from 34.6 in January. The total number of hours worked increased by 0.8%, which is good for economic growth this quarter.
Reuters Graphics
“With the recovery in hours worked and further gains projected for March, real GDP is expected to grow by nearly 3% (on an annual basis) in the first quarter,” said Brian Bethune, a professor of practice at Boston College. “The massive Black Swan invasion of Ukraine, combined with related jumps in crude oil and other commodity prices, still throws some sand into the growth machine in the first half.”
The details of the household survey, which shows the unemployment rate, were just as strong. Household employment increased by 548,000 jobs, more than enough to accommodate the 304,000 people who joined the workforce.
The unemployment rate fell by two tenths of a percentage point to 3.8% last month, the lowest level since February 2020. The labor force participation rate or the share of working-age Americans who have a job or are looking for work has increased to 62.3%, the highest level since March 2020, from 62.2% in January.
Men represent the increase, with 479,000 joining the workforce and 48,000 women leaving.
Labor market participation
“More payroll means more total purchasing power than consumers,” said Peter Essel, head of portfolio management at the Commonwealth Financial Network in Waltham, Massachusetts. “The result could create a strong second half, as more spending on new employees is focused on goods and services. If the current trend continues, today’s stock markets will look like a deal by the end of the year.”
The employment-to-population ratio, seen as a measure of the economy’s ability to create employment, rose to 59.9%, which is also the highest since March 2020, from 59.7% in January.
But the number of people working part-time for economic reasons rose by 418,000 to 4.1 million. This has raised a broader unemployment rate, which includes people who want to work but have given up demand, and those who work part-time because they cannot find a full-time job, to 7.2 % of 7.1% in January.
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Report by Lucia Muticani; Edited by Chizu Nomiyama, Andrea Ritchie and Paul Simao
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