US economy added 235k new jobs in February

Jobseekers at the TechFair LA, a technology job fair in Los Angeles. In another sign of a tightening labour market, the already low unemployment rate fell a tenth of a point to 4.7 per cent and wages grew 2.8 per cent.
Jobseekers at the TechFair LA, a technology job fair in Los Angeles. In another sign of a tightening labour market, the already low unemployment rate fell a tenth of a point to 4.7 per cent and wages grew 2.8 per cent.PHOTO: REUTERS

238k Jan rise also beat estimates; Fed likely to raise rates on strong back-to-back job growth

WASHINGTON • The United States economy created 235,000 net new jobs in February, far more than expected, and wages rose steadily - which could give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth.

Dow futures shot up 100 points after the strong jobs report and analysts said the news was likely to boost the chances that the Fed will raise its benchmark rate next week.

In another sign of a tightening labour market, the already low unemployment rate fell a tenth of a point to 4.7 per cent and wages grew 2.8 per cent from February 2016.

The 235,000 increase in jobs followed a 238,000 growth in January that was more than previously estimated, the best back-to-back rise since last July.

While unseasonably warm weather may have boosted the payroll headcount, the data covers President Donald Trump's first full month in office and coincides with a surge in economic optimism following his election victory. The figures also validate recent comments by Fed officials flagging a likely rate increase this month.

"The economy is riding a wave of optimism in the wake of the election," Mr Andrew Chamberlain, chief economist of jobs website Glassdoor, said before the report was released.

Last month was the second- warmest February on record in the contiguous 48 US states. Even so, the jobs figures indicate that the drivers of consumer spending probably remain intact after purchases slowed in January, suggesting that any easing of first-quarter economic growth will be temporary.

Fed chair Janet Yellen said last week the labour market is "in the vicinity of our maximum employment objective".

At the same time, payroll gains are forecast to slow, owing to factors including employers' difficulty in filling positions and tepid growth in the working-age population. For the full year, economists project an average monthly increase of 171,000 jobs, according to a February survey.

Mr Trump has set a goal of adding 25 million jobs over 10 years, which would require additions of 208,000 a month, or 2.5 million positions a year.

The unemployment rate, which is derived from a separate Labour Department survey, fell as employment increased by 447,000. The jobless rate matched the median projection of 4.7 per cent.

The number of people out of the labour force, a figure repeatedly highlighted by Mr Trump as a sign of economic malaise, fell by 176,000 to 94.2 million.

BLOOMBERG, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on March 11, 2017, with the headline 'US economy added 235k new jobs in February'. Print Edition | Subscribe