For the USA, it's jobs, jobs, jobs! (Just don't mention wages)
Mar 10 2018
The Labor Department reported on Friday that the US added 313,000 jobs for the biggest gain in almost two years.
The Department of Labor also revised job growth numbers upward in both December and January, adding another 64,000 jobs.
Despite a lower-than-expected wage increase in February, many economists said longer term trends still point to higher wages.
The unemployment rate was unchanged, at a 17-year low of 4.1 per cent, the fifth consecutive month at that level. Retails and business services added 50,000 jobs each. Average hourly earnings for just production and non-supervisory workers rose 2.5 percent from a year earlier, following a 2.4 percent gain in January. While wage growth rose by 2.6%, that is slightly slower than January's 2.9% increase. Hispanic unemployment was 4.9 percent.
Analysts said strong hiring in February all but guarantees the Fed will raise rates at its meeting later this month.
Though the unemployment rate is low, broader measures of unemployment are still elevated, suggesting there is still slack in the labor market that firms can draw from to increase worker output without very aggressively bidding up wages.
Construction firms added 61,000 workers, the biggest increase in almost 11 years for the sector.
Hourly wage growth, meanwhile, grew by 0.1 percent, a decrease from January, when it grew 0.3 percent.
Employment gains were led by the construction sector, which added 61,000 jobs, the most since March 2007. If we can start to generate that kind of job creation consistently, it will be indicative of an economy that's growing on the supply side, which means that worker productivity is driving the growth and spurring capital formation, which then turns around and provides those same workers with the means to consume the goods that are being produced.
US stock markets opened higher in reaction to the US Labor Department's report, which showed the biggest increase in jobs since July 2016.
The inflation fears stoked by last month's strong wage numbers may have been overdone, so the story goes.
With Federal Reserve officials considering the labour market to be near or a little beyond full employment, the moderation in wage growth last month will probably do little to change expectations the USA central bank will raise interest rates at its March 20-21 policy meeting. "This report has a Goldilocks feeling about it: incredibly strong growth but no real wage pressure", said Luke Bartholomew, an investment strategist at Aberdeen Standard Investments.
The U.S. economy has strengthened considerably in the last few years following an unusually sluggish economic recovery. But there are still plenty of working age adults out of the labor force. Up to 145,000 jobs could be lost even those industries will likely add workers. Since late 2013, the labor force participation rate overall has hovered around 63 percent (save a brief dip in 2015). Second, digging a little deeper into the earnings data reveals that earnings for non-supervisory workers was well short of the headline 2.9 percent, meaning that the broad-based earnings gains from a healthy labor market remain elusive.