U.S. employers added a robust 235,000 jobs in February and raised pay at a healthy pace, making it all but certain that the Federal Reserve will raise short-term interest rates next week.
Friday’s jobs report from the government made clear that the economy remains on solid footing nearly eight years after the Great Recession ended.
The unemployment rate fell to a low 4.7 percent from 4.8 percent, the Labor Department said. More people began looking for jobs in February, a sign that they’ve grown confident about their prospects for finding work. Hiring was strong enough to absorb those new job seekers as well as some of the previously unemployed.
February data for Long Island aren’t available yet, but the Island’s employment had a strong showing in January, when there were 27,900 more jobs than the same month a year earlier, according to the New York Department of Labor. Health care and retail accounted for much of the job growth. Unlike the national statistics, Long Island’s aren’t seasonally adjusted, so the department focuses on year-over-year comparisons.
The gains in national hiring and pay, along with better consumer and business confidence since the November election, could lift spending and investment in coming months and accelerate economic growth. Americans are buying homes at a solid pace, and manufacturing is rebounding, in part because of improving economies overseas.
“It’s hard to find much to dislike in the February jobs report,” said Michael Feroli, an economist at JPMorgan Chase, said.
Investors responded by lifting stock prices, with the Dow Jones industrial average up a modest 29 points in midday trading.
The February jobs data likely provides the final piece of evidence the Fed needs to raise rates next week for the third time in 15 months. The Fed’s inclination to tighten borrowing rates reflects how far the economy has come since the central bank cut its benchmark short-term rate to zero in 2008 and kept it there for seven years to support a fragile economy.
In December, Fed policymakers forecast that they would raise rates a total of three times this year. Those increases could lead eventually to higher loan rates for homes and cars as the economy further solidifies its gains. Economists said Friday’s hiring data increases the probability of additional rate hikes.
“Job growth continues to offer a positive reflection on underlying economic conditions,” said Russell Price, an economist at Ameriprise Financial. “There are few factors more important to consumers than jobs. Overall, consumers are in great shape to support an accelerated pace of economic growth.”
Friday’s report was the first to cover a full month under President Donald Trump. During the presidential campaign, Trump had cast doubt on the validity of the government’s jobs data, calling the unemployment rate a “hoax.” But just minutes after Friday’s report was released at 8:30 a.m. Eastern time, Trump retweeted a news report touting the job growth.
Last month’s hiring was boosted by 58,000 additional construction jobs, the most in nearly a decade and three times that sector’s average in the previous three months. Unseasonably warm weather likely inflated that figure, economists said. Last month was the second-warmest February since 1895.
If warm weather did help elevate construction hiring last month, it might also have the effect of subtracting from job growth that would normally occur in early spring.
“There will probably be some weather payback in March,” Ted Wieseman, an economist at Morgan Stanley, said in an email.
Mining, which includes oil and gas drilling, added 7,700 jobs last month, the most in nearly three years. Energy companies have increased drilling in response to higher oil prices, reversing nearly two years of job losses. Oil prices have declined this week, though.
Average hourly pay rose 2.8 percent year over year in February, a decent gain though slightly below historical averages. In a healthy economy, wages typically rise at a roughly 3.5 percent annual pace.
Though most of the job market’s scars from the Great Recession have healed, some have still not. The number of part-time workers who would prefer a full-time job but can’t find it remains nearly 25 percent above its level before the recession began in 2007.
That’s a big reason why an alternate measure of unemployment, which includes those involuntary part-time workers as well as people who have stopped job-hunting, was 9.2 percent last month. That is well below its peak but is still higher than before the recession.
Business confidence has risen since the presidential election, with many executives saying they expect faster economic growth to result from Trump’s promised tax cuts, deregulation and infrastructure spending.
Vicki Holt, CEO of Proto Labs, which makes parts for automakers, medical device and aerospace companies, says that her clients have grown more optimistic.
“Our customer base is really excited about the general climate and support for manufacturing from the administration,” Holt said. “And that helps us.”
The United States is also benefiting from steadier economies overseas. Growth is picking up or stabilizing in most European countries as well as in China and Japan.
The 19-nation alliance that uses the euro currency expanded 1.7 percent in 2016, an improvement from years of recession and anemic growth.
Recent pay growth partly reflects higher minimum wages that took effect at the start of the year in 19 states, economists said. In addition, steady job gains tend to raise pay as employers compete for workers.
Hourly wages for the typical worker rose 3.1 percent in 2016, according to a report this week by the Economic Policy Institute. That’s much higher than the 0.3 percent average annual pay gain, adjusted for inflation, since 2007, the EPI said.
With Carrie Mason-Draffen