US job gains accelerate while wage growth slows sharply

NEW YORK (NYTIMES, BLOOMBERG) - Job growth accelerated last month, as falling coronavirus cases brought customers back to businesses and workers back to the office.

United States employers added 678,000 jobs in February, the Labour Department said on Friday (March 4).

The gain topped economists' forecasts for a second straight month, after employers in January shrugged off a spike in coronavirus cases and kept hiring workers.

The unemployment rate in February fell to 3.8 per cent. The data was collected in mid-February, before the Russian invasion of Ukraine, which roiled global financial markets and caused a sharp increase in energy prices.

Analysts say the US is less vulnerable than Europe to the economic effects of the crisis, but warn that a prolonged conflict will have global repercussions that are hard to predict.

But so far, at least, the labour market recovery has overcome every obstacle.

Job openings are near a record high. Layoffs are at an all-time low. And hiring has remained strong in the ebb and flow of successive waves of the pandemic - employers have added at least 400,000 jobs every month since May, the longest such streak on record.

"This is an economy that has learned to manage very well through uncertainty," said Mr Robert Rosener, senior US economist at Morgan Stanley.

"We've continually been surprised by the resilience of the US labour market."

The US economy still has hundreds of thousands fewer jobs than before the mass layoffs that began two years ago this month, and some workers remain sidelined by health concerns, child care problems or other factors.

But strong hiring in February, combined with the steady decline in new coronavirus cases, has made some forecasters optimistic that the economy is on a path back to something resembling normal.

States have lifted mask mandates, and companies are again trying to attract workers back to the office. That could bring economic dividends, as workers return to central business districts.

"That will supercharge the recovery among downtown businesses," said Ms Julia Pollak, chief economist at career site ZipRecruiter.

"The industries that have taken the longest to recover, I think it's their turn now."

Still, many companies continue to report trouble attracting workers - a challenge that may become even more difficult if those workers are expected to show up in person, something surveys show many are reluctant to do.

The competition for labour has pushed up wages - good news for employees, but a concern for policymakers at the Federal Reserve, who are already worried about rapid inflation.

Strong hiring and the lower unemployment rate support the Fed's plan to raise rates this month.

Chair Jerome Powell reaffirmed that plan this week after Russia's invasion of Ukraine, which has led to a surge in oil, metals and grain prices and clouded the US economic outlook.

He said he favours a 25 basis-point increase to kick off an expected series of hikes this year.