Feb. job growth could clinch Fed rate hike

Unemployment rate slips to a low 4.7%

WASHINGTON — 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 dipped to a low 4.7 percent from 4.8 percent, the Labor Department said. More people began looking for jobs in February, a sign of confidence that raised the proportion of Americans working or seeking work to the highest level in nearly a year.

The gains in hiring and pay, along with higher 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.

Investors responded initially by sending stock prices up sharply Friday. By closing time, ate morning, though, stock indexes were up moderately.

The February jobs data likely provides the final piece of evidence the Fed needs to feel confident enough 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, which would lead eventually to higher loan rates for homes and cars as the economy further solidifies its gains. Friday’s figures make additional rate hikes this year more likely, economists said.

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.

Minimum wage increases last year in 17 states and Washington, D.C., helped raise pay among the lowest-paid workers, the EPI found. Pay increases for the poorest 10 percent of workers were more than twice as high in states where the minimum wage rose as in states where it did not.

At the start of 2017, minimum wages rose again in 19 states.