US job rebound eases fears of recession
Print Edition
US employment gains surged in February, the clearest sign yet of labor market strength that could further ease fears the economy was heading into recession and allow the Federal Reserve to gradually raise interest rates this year.
Nonfarm payrolls increased by 242,000 jobs last month, the Labor Department said yesterday. The jobless rate held at an eight-year low of 4.9 percent even as more people piled into the labor market.
“This is the best news the Fed could have expected going into the meeting. With jobs bouncing back, you can be sure that rate hikes are just around the corner,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.
The economy added 30,000 more jobs in December and January than previously reported. The only blemish in the report was a 3-cent drop in average hourly earnings, but that was mostly because of a calendar quirk.
The average length of the workweek also fell last month.
Economists had forecast employment increasing by 190,000 last month and the jobless rate holding steady.
The employment report added to data such as consumer and business spending in suggesting the economy had regained momentum after growth slowed to a 1 percent annual rate in the fourth quarter. Growth estimates for the first quarter are around a 2.5 percent rate.
Financial markets have priced out bets of a rate rise at the Fed’s March 15-16 policy meeting and see a roughly 50 percent chance of a hike at the September and November meetings, according to CME FedWatch.
Economists, however, believe the strong jobs market and improved growth outlook, together with signs that inflation is creeping up, could prompt the Fed to lift borrowing costs in June.
The Fed raised its key overnight interest rate in December for the first time in nearly a decade.
Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the working-age population.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, increased two tenths of a percentage point to 62.9 percent, the highest level in just over a year.
Adding to the report’s strength, a broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell two tenths of a percentage point to 9.7 percent.
The employment-to-population ratio also increased to 59.8 percent last month, the highest since April 2009, from 59.6 percent in January.
While wage growth weakened in February, it was largely payback for January’s jump, which was driven by a calendar quirk. Growth in wages is seen accelerating as the labor market settles into full employment.
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