There was a lot of important information on the U.S. economy released this week, but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America surged by 313K payrolls in February, significantly better than the 205K gain economists expected and the 89th consecutive month of job growth. There was also a net upward revision of 54K payrolls to the December and January figures, which equated to an average monthly payrolls gain of 242K over the past three months. That is comfortably above Federal Reserve officials’ estimates for what is needed to keep up with U.S. population growth.
As for joblessness in America, the official unemployment rate (U-3) held at 4.1 percent in February, while the underemployment rate (U-6) was unchanged at 8.2 percent, both near the best levels of the current business cycle. Elsewhere, the labor force participation rate, which remains under pressure from the growing number of Baby Boomers retiring (exiting the workforce), rose to 63.0 percent last month, the highest reading in half a year. With respect to wage growth, average hourly earnings increased by 0.1 percent in February, worse than anticipated but hours worked ticked higher, suggesting capacity constraints. Altogether, job growth is very strong and unemployment is very low, so it is hard not to agree that officials at the Federal Reserve should be concerned about inflation. With wage growth still relatively weak, though, inflation likely remains well below the Fed’s target. Regardless, the market is generally convinced that the next rate hike will occur later this month.
Sources: Econoday, U.S. DoL, Twitter, Bloomberg, FRBSLPost author: Charles Couch