The U.S. added 311,000 jobs in February, which was higher than most economists anticipated, while the unemployment rate rose to 3.6%, the Bureau of Labor Statistics (BLS) reported Friday.
Economists had expected the country would add slightly more than 200,000 jobs compared to 504,000 in January, and that unemployment would remain at approximately 3.4%, the lowest it has been since May 1969. Anticipating continued economic strength, Federal Reserve Chair Jerome Powell indicated in his testimony to the Senate Banking Committee on Tuesday that the Fed may speed up interest rate hikes more than expected to combat inflation. (RELATED: Economic Analysts Claim Low Unemployment Numbers Might Be Misleading)
Powell also testified that the Fed would like to see the labor market significantly weaken to cool wage growth which is contributing to inflation, according to Politico. As this is the last jobs report before the next Fed interest rate decision on March 22, interest rates will likely be hiked at least 25 basis points, according to CNBC.
“Today’s unemployment data was, like January’s, uncommonly strong. Although there were some signs of softening (among them, average hourly earnings easing), today’s numbers may be enough to tip the balance from a 25 basis point hike to a 50 basis point hike at the 21 – 22 March FOMC meeting,” Senior research economist with American Institute For Economic Research Pete Earle told The Daily Caller News Foundation.
Ahead of the US jobs report out in 1/2 hour:
Markets and everyday Americans are aligned in hopes of higher labor force participation.
Short-term alignment diverges, however, when it comes to job gains and wage increases due to #markets fear of larger hikes by the #FederalReserve. pic.twitter.com/h9BrY5F6Xq
— Mohamed A. El-Erian (@elerianm) March 10, 2023
Payroll firm ADP reported that private payrolls increased by an estimated 242,000 jobs in February, which was higher than anticipated and led by leisure and hospitality. Significant job gains occurred in retail trade, government, and health care, while losses occurred in information as well as transportation and warehousing, according to the BLS report.
“The labor market is still experiencing a whiplash effect, as evidenced by the continued large gains in leisure and hospitality as well as retail,” Heritage Foundation economist E.J. Antoni told the Daily Caller News Foundation. “Those sectors are still trying to catch up to their pre-pandemic trend, being hit so hard by the government-imposed shutdowns.”
“These unprecedented shocks have reduced the reliability of the labor market as a macroeconomic indicator,” Antoni added.
The labor force participation rate barely changed since early 2022, as it was 62.5% in February. It is below pre-pandemic February 2020 levels of 63.3%, according to the report.
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