Hiring may bring in­ter­est rate hike

La­bor Depart­ment re­ports 235,000 jobs were added in Fe­bru­ary.

Austin American-Statesman - - FRONT PAGE - Pa­tri­cia Co­hen ©2017 The New York Times

Even the weather co­op­er­ated. Pretty much all the in­gre­di­ents needed for a rous­ing dis­play of la­bor mar­ket strength lined up in Fe­bru­ary, with gains in pay­rolls, wages and the size of the over­all work­force.

The strong monthly jobs re­port on Fri­day — rep­re­sent­ing Pres­i­dent Don­ald Trump’s first full month in of­fice — should sweep away any last-minute reser­va­tions har­bored by Fed­eral Re­serve pol­i­cy­mak­ers about rais­ing the bench­mark in­ter­est rate when they meet next week.

“The econ­omy is rid­ing a wave of bullish sen­ti­ment post­elec­tion,” said Andrew Cham­ber­lain, chief econ­o­mist at Glass­door, a ca­reer web­site. “We’re see­ing strong la­bor de­mand across the board and no sign of slow­ing right now.”

With the La­bor Depart­ment re­port­ing a gain of 235,000 jobs for the month, Repub­li­cans and Democrats quickly jos­tled for credit.

Sean Spicer, the White House press sec­re­tary, said of Trump, “He’s jump-started job cre­ation, not only through his ex­ec­u­tive ac­tion but be­cause of the surge in eco­nomic con­fi­dence and op­ti­mism that has been in­spired since his elec­tion.”

Trump, who, as a can­di­date, re­peat­edly dis­missed the of­fi­cial jobs re­ports as phony, re­posted a com­ment on Twit­ter from the con­ser­va­tive web­site Drudge Re­port that said, “GREAT AGAIN: +235,000.” Spicer later quoted Trump on his faith in the re­port: “They may have been phony in the past, but it’s very real now.”

The Repub­li­can self-con­grat­u­la­tion clearly irked Democrats. Tom Perez, la­bor sec­re­tary in the Obama ad­min­is­tra­tion and

now chair­man of the Demo­cratic Na­tional Com­mit­tee, coun­tered that Trump had “ab­so­lutely noth­ing” to do with the job gains.

“Trump in­her­ited an econ­omy from Barack Obama with the long­est streak of pri­vate sec­tor job growth in his­tory,” he said.

The La­bor Depart­ment re­peated that it had not changed the way it col­lected and an­a­lyzed jobs data since Trump took of­fice.

“It’s busi­ness as usual,” said Megan Kin­de­lan, di­rec­tor of public af­fairs at the Bureau of La­bor Statis­tics.

Although the eco­nomic anx­i­ety that helped put Trump in the White House re­mains, the of­fi­cial job­less rate is near what the Fed con­sid­ers full em­ploy­ment — a thresh­old where, in the­ory at least, ev­ery­one who wants a job at the go­ing rate can find one. The of­fi­cial job­less rate fell to 4.7 per­cent, from 4.8 per­cent in Jan­uary.

At the same time, job­less claims are near a 44-year low and the stock mar­ket is surg­ing. Re­vi­sions to Jan­uary’s es­ti­mates raised the three­month av­er­age of monthly job gains to 209,000 and an­nual wage growth to 2.8 per­cent, fur­ther bol­ster­ing the case for those who ar­gue the econ­omy is strong enough to with­stand a rate in­crease.

The over­all eco­nomic mo­men­tum re­ceived a push from Fe­bru­ary’s un­usu­ally warm weather, with al­most a quar­ter of the new jobs — about 58,000 — com­ing from con­struc­tion.

Man­u­fac­tur­ing and min­ing rose, too.

Also sig­nif­i­cant was the in­crease in the la­bor par­tic­i­pa­tion rate to 63 per­cent, a re­sult of ris­ing em­ploy­ment even among peo­ple with­out a high school diploma.

“There’s got to be some op­ti­mism that th­ese peo­ple are feel­ing they fi­nally have a chance,” said Diane Swonk, founder and chief ex­ec­u­tive of DS eco­nom­ics in Chicago.

On the other end are em­ploy­ers who are see­ing acute la­bor short­ages.

“They’re of­fer­ing train­ing pro­grams now,” Swonk said. “They’re com­plain­ing about it. But that’s what tight la­bor markets do. It forces you to in­vest more to work with less.”

Big­ger pay­checks are some­thing that most Amer­i­cans, after years of stag­nant wage growth, are par­tic­u­larly ea­ger to see. The Fed, too, has been wait­ing for an in­crease, but it is also wary of wages ris­ing too fast. The board’s mem­bers want to head off in­cip­i­ent in­fla­tion with­out putting the brakes on hiring, es­pe­cially be­cause the ben­e­fits of the 8-yearold re­cov­ery have been so un­evenly dis­trib­uted.

At the same time, a broader mea­sure of unemployment — which in­cludes the mil­lions of Amer­i­cans who have given up look­ing for work al­to­gether or are work­ing part time but would pre­fer full-time jobs — dropped to 9.2 per­cent last month but is still high given how tight the la­bor mar­ket looks oth­er­wise.

Although the Trump White House has had lit­tle time to make any sub­stan­tial pol­icy changes, an­tic­i­pa­tion of a roll­back in taxes and reg­u­la­tions and the pos­si­bil­ity of vast in­fras­truc­ture spend­ing has cre­ated op­ti­mism among em­ploy­ers and blue-col­lar work­ers.

Trump’s prom­ises of 4 per­cent eco­nomic growth and mil­lions of new jobs face po­ten­tial head­winds, though. Dis­sen­sion among Repub­li­cans and the un­pre­dictabil­ity of Trump’s course in sev­eral pol­icy ar­eas could dampen job growth.

The fu­ture of the health care law and a pos­si­ble re­place­ment is mak­ing hos­pi­tals and com­mu­nity health cen­ters cau­tious about adding work­ers.

And a strong dol­lar and a po­ten­tial back­lash against the White House’s travel ban could slow tourism and hiring in the sec­tor. Trump’s across-the-board hiring freeze on fed­eral govern­ment jobs, com­bined with de­clines at the state level, is likely to con­tain the num­ber of public sec­tor em­ploy­ees.

LM OTERO / AP

Job seek­ers look at their re­spec­tive computer screens dur­ing a re­sume writ­ing class at the Texas Work­force So­lu­tions of­fice in Dal­las on Fri­day. 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.

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