US creates quarter of a million jobs in a month despite global fears

AMERICAN employers added almost a quarter of a million people to their payrolls last month, highlighting the resilience of the jobs market even as global jitters grow.

US payrolls increased by 242,000 in February, according to the US Labor Department. This was higher than the 195,000 increase predicted by economists and follows a 172,000 rise in January.

Stock markets in the US rose following the figures, with the Dow Jones Industrial Average closing above 17,000 for the first time in two months.

While robust jobs growth could pave the way for further interest rate rises by the Federal Reserve this year, the data also showed that average hourly earnings fell 0.1pc in February. This was the first monthly decline since December 2014; analysts had expected earnings to rise by 0.2pc.

The unemployment rate remained at an eight-year low of 4.9pc. A broader measure of joblessness, which includes part-time workers who would rather be in full-time work, fell 0.2 percentage points to 9.7pc. Economists said Fed policymakers would probably leave interest rates on hold this month as they wait for more evidence that the US recovery is entrenched and inflation is rising back to its 2pc target.

“A March rate hike remains off the table, in our view,” said Rob Carnell, chief international economist at ING. “The mixed nature of this report makes it unclear what the Fed should in fact be doing longer term. We think they will need to see another month or two of data to get a sensible idea of just what is happening to the US labour market.”

The Fed raised rates for the first time in almost a decade last December. Analysts at Capital Economics believe policymakers will resume raising interest rates in June as the labour market tightens. Others said the dip in wages was probably temporary.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the pay data were distorted by the fact that the employment survey took place before the mid-month payday for people paid on the 15th of each month.

“Don’t be taken in by the dip in hourly earnings; it just continues a very consistent pattern of undershooting in months when the payday for people paid [fortnightly] falls after the employment survey week. There’ll be a huge rebound, putting annual wage growth at new highs.”

A breakdown of the jobs data showed that the education and health, and retail sectors saw strong respective job gains of 86,000 and 40,000 respectively. This more than offset job losses at manufacturers and oil and gas producers.

“The February employment report is likely to give the Fed confidence that the labour market remains on solid footing while inflationary pressures remain subdued,” said Paul Mortimer-Lee, an economist at BNP Paribas.