Breaking News
0

Hiring Rises In February, Unemployment Rate Steady At 4.1%

By ORBEXForexMar 13, 2018 06:43AM ET
www.investing.com/analysis/hiring-rises-in-february-unemployment-rate-steady-at-41-200297548
Hiring Rises In February, Unemployment Rate Steady At 4.1%
By ORBEX   |  Mar 13, 2018 06:43AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Hiring rose in February in the United States as more people were seen joining the workforce, underlining the fact that the U.S. economy could potentially continue at the same pace without overheating.

Reacting to the payrolls report, the equity markets have pushed the major indices higher on the day while the U.S. dollar was met with a subdued reaction.

Data from the Labor Department showed that the U.S. economy added 313,000 jobs on a seasonally adjusted basis in February. This was much higher than the median estimates that were forecast by the economists, and February’s numbers were the highest since July 2016.

Almost all sectors of the economy were seen contributing to the job creation as hiring rises in February. The most notable gains came from the construction and retail services sectors. Other sectors including mining and business services and manufacturing chipped in.

Over 800,000 workers were seen joining the workforce last month. Despite the strong pace of increase in jobs, the U.S. unemployment rate was seen to be holding steady at 4.1%. Economists were forecasting that the unemployment rate could fall to 4.0% in February.

Wage growth was also seen to be muted which comes from the fact that with more people joining the labor force, the expanding pool of workers kept demand for higher wages in check.

Average hourly earnings in the U.S. for the private sector were seen rising 2.6% on the year in February. This was a slower pace of increase compared to January’s 2.8% when wage growth increased sharply in January.

The Federal Reserve has been pinning hopes of higher wage growth which is expected to push inflation higher. Despite a strong stretch of economic data, the U.S. inflation rate has remained largely flat and still below the Fed’s 2% inflation target rate. With a slower pace of wage hikes despite an expanding workforce, the Federal Reserve is expected to take a less aggressive path on interest rate hikes, a fact that had previously gotten investors worried.

The payrolls data for January showed the biggest increase since the end of the recession and the markets were concerned on the fact that higher paychecks could quickly lead to a strong build up in inflation. However, Friday’s report saw January’s wage growth being revised down.

The payrolls report comes out ahead of the FOMC meeting that is due in two weeks time. In the December Fed meeting, central bank officials projected three quarter point increases to the Fed funds rate. The first rate hike of this year is expected to be announced at the meeting in March.

There has also been speculation building up that the central bank could potentially add another rate hike this year, which would mean that interest rate hikes could come in almost every quarter.

The broad dynamics in the labor market was clearly evident but the fact that workers who were not previously seeking work joining the workforce was seen as a positive. The downside risk was of course the fact that wage growth remains muted.

A few weeks ago, the newly appointed Fed Chair, Jerome Powell gave his two-day testimony to the U.S. Congress. In his testimony, Powell said that there was capacity for the U.S. unemployment rate to fall below 4.0% without the economy overheating.

Looking deeper into the report, despite the unemployment rate staying low, other measures of unemployment were still elevated. This indicated that there was still a lot of spare capacity in the markets that companies can tap into without concerns of rising wages.

The underemployment rate of U-6 was seen 8.2% in February. The report covers workers in part time jobs or discouraged to seek work.

Hiring Rises In February, Unemployment Rate Steady At 4.1%
 

Related Articles

Hiring Rises In February, Unemployment Rate Steady At 4.1%

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer:


Continue with Google
or
Sign up with Email