U.S. added 235,000 jobs in February; unemployment rate dropped to 4.7 percent
The unemployment rate
4.7 percent of all workers were unemployed in February 2017.
The U.S. economy added 235,000 jobs in February, according to government data released Friday, surpassing economists' expectations and probably clearing the way for the Federal Reserve to raise interest rates this month.
The unemployment rate ticked down to 4.7 percent, compared with 4.8 percent in January. Wages rose by 6 cents to $26.09, after a disappointingly low 3-cent increase the month before.
“It’s definitely a solid report,” said Tara Sinclair, an economist at George Washington University. “This is the kind of number that the Federal Reserve was looking to receive before their meetings next week.”
Job gains outstripped the estimate of economists surveyed by Bloomberg, who had been looking for an addition of 200,000 jobs in the first full month of Donald Trump’s presidency.
Educational services, manufacturing, health care and mining accounted for much of the hiring last month. Construction employment surged, as unseasonably warm weather in many states allowed crews to work through February.
The Labor Department also revised its estimates for job creation in December and January, increasing the total number of jobs added to 9,000 more than previously reported.
The release of February’s unemployment data was widely seen as the final hurdle before the Federal Reserve’s March 14-15 meeting, when the central bank is expected to announce a quarter-point increase in its benchmark interest rate.
Shortly after the jobs report was released, the odds of a March rate increase climbed to more than 90 percent, up from only 25 percent at the beginning of February, according to futures contracts monitored by the CME Group's FedWatch program.
U.S. stock markets opened slightly higher Friday, though they remain below the historic peaks reached on March 1.
A separate survey published early in the week by ADP and Moody’s Analytics showed the private sector adding 298,000 jobs in February, blowing past economists' expectations for a figure of 189,000.
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Average hourly wages rose 2.8 percent over the last 12 months, a sign that employers are being forced to compete for workers by hiking wages as the economy continues to heat up.
“We’re in that curious environment where the only good news is news that surpasses our already high expectations,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman. “But I’m hard pressed to find anything disappointing in this report.”
Measures of business and consumer confidence have risen in recent months, due in part to the continued long-run recovery of the economy and expectations of a more business-friendly environment under the Trump administration. In early March, Gallup's U.S. Economic Confidence Index, a measure of how Americans rate current economic conditions, rose to the highest level in its nine-year history.
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On Friday morning, Trump retweeted a tweet by Drudge Report with a link to a news story on the job data. “GREAT AGAIN: +235,000,” the tweet read.
Republicans greeted the data, which comes a little more than a month into Trump's presidency, as a reflection of the new administration's policies.
“The fact that hundreds of thousands more people found new jobs last month is a good sign that our economy is moving in the right direction,” Rep. Kevin Brady (R-Tex.) said in a statement. “While we still have much more work to do, I'm optimistic that the actions that President Trump and House Republicans are taking will add to this momentum — creating more jobs, growing families’ paychecks, and improving the lives of all Americans.”
Trump’s ambitious pledges to slash corporate taxes, cut regulations and boost spending on infrastructure have helped push stock markets to record highs in recent weeks. Yet some economists question whether other pledges, such as a federal workforce hiring freeze, a reduction in immigration and a more combative attitude toward international trade, could ultimately weigh on growth.
The administration is already confronting the challenge of translating campaign trail promises into legislation as it prepares to issue a portion of its budget around March 16.
Strong economic data in recent months appear to have persuaded the Federal Reserve that it can lift interest rates without hurting the labor market. Last Friday, Fed Chair Janet L. Yellen added her voice to a chorus of Fed governors and reserve bank presidents who had signaled in public speeches that a rate hike was likely to come this month.
“On the whole, the prospects for further moderate economic growth look encouraging,” Yellen said in a speech to the Executives' Club of Chicago.
The central bank has forecast three rate increases for this year, though Yellen and others have been careful to specify that the pace of tightening will hinge on the economy’s progress.
“Raising rates next week is as close to a certainty as you ever get in this business,” Clemons said.