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Job growth in February exceeded expectations


US employers added more jobs than economists expected last month, underscoring the resilience of the labor market amid a thawing economy as the Federal Reserve raises interest rates to cool inflation.

US employers added 311,000 jobs in February, the Bureau of Labor Statistics (BLS) reported on Friday. That figure was well above forecasts of 205,000 and compared with a downwardly revised increase of 504,000 in January.

The jobless rate rose to 3.6 percent from a 53-year low of 3.4 percent in January, with the number of jobless workers little changed at 5.9 million. The labor force participation rate, which measures the share of the workforce employed or looking for work, rose to 62.5 percent, while the employment-to-population ratio remained steady at 60.2 percent.

The stronger-than-expected wage increase could complicate the Federal Reserve’s efforts to cool the economy by raising interest rates and prompt policymakers to consider more aggressive rate hikes at the Fed’s next meeting later this month and in the coming months .

Key findings

  • US employers added 311,000 jobs in February, beating expectations of 205,000
  • The unemployment rate rose to 3.6% from a 53-year low of 3.4% in January
  • Gains were led by the leisure and hospitality sector, which added 105,000 jobs
  • Other sectors reporting gains included retail trade, government, professional and business services, and health care
  • Losses in transport and storage as well as information are reported
  • Employment in oil and gas extraction, manufacturing, wholesale trade and financial activities was little changed
  • Private sector wages rose 0.2%, slowing from a 0.3% rise in January

Earnings by sector

As has been the case throughout much of the recovery from the pandemic, job gains were led by the leisure and hospitality sector, which added 105,000 new jobs, with an increase of 70,000 in restaurants and bars. Despite recent gains, employment in the sector is still 2.4% below its pre-pandemic level in February 2020.

Retail employment rose by 50,000, led by a 39,000 increase in convenience stores. Government wages rose by 46,000, led by a gain of 37,000 in local government positions. Professional and business services added 45,000 jobs, while health care employment increased by 44,000.

Sectors that lost jobs in February included the information industry (-25,000) and transportation and warehousing (-22,000). Employment in manufacturing, oil and gas extraction, wholesale trade and financial activities was little changed compared to the previous month.

Slowing wage growth

Average hourly earnings for private sector workers rose just 0.2 percent last month to $33.09, compared with a 0.3 percent gain in January. On an annual basis, they rose 4.6%, accelerating slightly from 4.4% in January.

Implications for monetary policy

Stronger-than-expected jobs growth could prompt the Fed to raise interest rates more aggressively at its next policy meeting. Markets are currently pricing in a nearly 50 percent chance the Fed will raise interest rates by 50 basis points at the upcoming March 21-22 FOMC meeting, according to federal funds futures data compiled by CME Group. Traders expect a terminal feed rate between 5.25% and 5.5% by July.

U.S. equity markets tumbled in early trade on Friday, while bond prices rose, with the yield on the 10-year Treasury note falling more than 20 basis points to 3.7%.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.