On Friday, the government reported that employers added 235,000 workers to their payrolls in February, a hefty gain that clears the path for the Federal Reserve to raise its benchmark interest rate when it meets next week.
The official unemployment rate fell to 4.7 percent, from 4.8 percent in January, while average hourly earnings grew by 0.2 percent in a report that overlaps with President Trump’s first full month in office.
“They’re ready to go,” said Diane Swonk, founder and chief executive of DS Economics, referring to the central bank’s expected vote next week to raise rates from their historically low levels.
President Trump, who had dismissed the official jobs reports as fake when he was a candidate, reposted a comment on Twitter from the conservative website Drudge Report that said “GREAT AGAIN: +235,000.”
GREAT AGAIN: +235,000 https://t.co/GkockGNdtC
— DRUDGE REPORT (@DRUDGE_REPORT) March 10, 2017
The overall economic momentum and optimism was given an extra push by February’s unusually warm weather, with almost a quarter of the jobs — about 58,000 — coming from construction alone. Manufacturing also bounced back.
Over the past three months, including revisions announced Friday, monthly job growth has averaged 209,000, while year-over-year wage growth jumped up to 2.8 percent. Unemployment claims are near a 44-year low, the stock market is surging, and consumer spending is growing, bolstering the case for those who argue the economy is strong enough to withstand a rate increase.
However there are some employers and recruiters who are seeing acute labor shortages. “They offering training programs now,” she said. “They’re complaining about it. That’s what tight labor markets do. It forces you to invest more to work with less.” They are now forced to raise wages, strengthen benefits and offer better amenities at the office. “There is a war for talent,” said Lauren Griffin, senior vice president at Adecco Staffing USA. “We’ve got people in orientation classes and they get up and leave because they’re contacted about another job that might be more money.”
Andrew Chamberlain, chief economist at Glassdoor, a career website, said that even lower-skill workers in some sectors are finding themselves in more demand. For example, the year-over-year wage gains for store managers and cashiers, were twice the national average.
After years of stagnant wage growth, Americans are definitely looking forward to bigger paychecks. The Federal Reserve, has also been waiting for an increase, but it is also wary of wages rising too quickly. The board’s members want to head off incipient inflation and so have begun to slowly raise rates, which increases the cost of borrowing and risk-taking. At the same time, the Fed wants to avoid putting the brakes on job hiring, especially because the benefits of the eight-year-old recovery have been so unevenly distributed.