U.S. employers added the most workers since mid-2016 as labor-force participation swelled, while below-forecast wages and a downward revision to January’s figure suggest the pay gains that spooked markets last month aren’t yet taking hold.
Payrolls rose 313,000 in February, compared with the 205,000 median estimate in a survey of economists, and the two prior months were revised higher by 54,000, Labor Department figures showed Friday. The jobless rate held at 4.1%, the fifth straight month at that level. Average hourly earnings increased 2.6% from a year earlier following a downwardly revised 2.8% gain.
The report signals the labor market remains strong and will keep driving economic growth, while the wage figures show a cooling from a pace that spurred financial turbulence last month on concern that the Federal Reserve could raise interest rates faster. Meanwhile, the unemployment rate remains well below Fed estimates of levels sustainable in the long run.
“All the ingredients are in place for wages to accelerate, but it’s going to take time,” Ryan Sweet, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “There could still be some more shadow slack. As the unemployment rate goes lower, wage pressures are going to build.”
For now, rising labor-force participation may be a factor holding down wage gains. The participation rate increased to 63%, the highest since September, from 62.7% the prior month, as the number of employed people in the workforce rose by 785,000, according to the report.
The U-6, or underemployment rate, was unchanged at 8.2%; measure includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking People working part-time for economic reasons rose by 171,000 to 5.16 million Private employment rose by 287,000 (median estimate 205,000) after increasing 238,000; government payrolls rose by 26,000.
by Shobhana Chandra, with assistance from Chris Middleton