Employees payrolls surge while wages drop in mixed jobs report
EMPLOYEES added more workers in February than projected but wages unexpectedly declined, dashing hopes that reduced slack in the labour market was starting to benefit all Americans.
The 242,000 gain followed a 172,000 rise in January that was larger than previously estimated, a Labour Department report showed Friday.
The jobless rate held at 4.9 per cent as people entered the labour force and found work. Average hourly earnings dropped, the first monthly decline in more than a year.
A job market in good health will reinforce job security and encourage Americans to spend, buffering the United States from the ill- effects of global economic weakness.
While employment is robust, and will play a role in deciding the race for the White House, bigger wage gains are needed help move inflation closer to the Federal Reserve’s goal.
“Overall employment growth remains strong despite the global headwinds,” Jim O’Sullivan, chief US economist at High Frequency Economics Ltd in Valhalla, New York, said before the report.
“There’s not a lot of slack left in the job market.”
The median forecast in a Bloomberg survey called for a 195,000 advance. Estimates of 92 economists ranged from gains of 70,000 to 245,000. January was initially reported as a 151,000 increase.
Revisions to prior reports added a total of 30,000 jobs to payrolls in the previous two months.
The unemployment rate, which is derived from a separate Labour Department survey of households, was projected to hold at an eight-year low of 4.9 per cent, according to the survey median.
The labour market is coming off its best two years for job growth since 1998 to 1999. While leading Democratic presidential candidate Hillary Clinton can point to economic progress under her party’s leadership, Republican front-runner Donald Trump may steer voters to focus on limited wage growth and companies moving operations overseas because of high corporate tax rates.
Average hourly earnings dropped by 0.1 per cent from the prior month, the first decline since December 2014 the Labour Department’s figures showed. Worker pay increased 2.2 per cent over the 12 months ended in February, less than the 2.5 per cent forecast in the Bloomberg survey.
Wage growth has been hovering just above two per cent year- over-year on average since the current expansion began in mid-2009.
Retailers posted strong employment gains for a second month, along with the health care industry. Payrolls at retailers climbed about 55,000 in February after a 62,000 advance a month earlier, while health care employment increased 57,400.
Payrolls at factories declined by 16,000 after a 23,000 gain and construction companies added 19,000 workers.
The average work week for all workers declined to 34.4 hours from 34.6 hours.
The participation rate, which shows the share of workingage people in the labour force, jumped to 62.9 per cent, the highest since January 2015.
Fed policy makers, who lifted interest rates in December for the first time in almost a decade, have said they will make further moves gradually.
They meet later this month. Sustained wage growth will help lift inflation closer to the central bank’s goal. — WP-Bloomberg