The US economy added 678,000 jobs in February, exceeding economists’ expectations.
It was the best month for job growth since July. The nation has 2.1 million jobs to go before hitting the February 2020 level and recouping all positions lost in the pandemic, the Bureau of Labor Statistics reported Friday.
“It’s mindbogglingly fast and sustained growth — well over half a million jobs added per month on average for more than a year,” Heidi Shierholz, president at the Economic Policy Institute, wrote on Twitter. More than nine out of every 10 jobs lost during the pandemic recession have been regained, she added.
But once again, the consensus prediction for the report – 400,000 jobs – missed the mark. Erratic swings in the labor market from one month to another have made forecasters’ jobs much harder during the pandemic.
The unemployment rate edged down to 3.8%, also better than expected, representing a new pandemic-era low.
The leisure and hospitality sector, which was hit hardest by Covid-related layoffs, once again added the most jobs back, at 179,000. The industry needs another 1.5 million jobs in order to reach its pre-pandemic level. Most of the positions added in February were created at restaurants and bars as Americans ventured out more to socialize once the Omicron surge subsided.
Professional services, health care and construction also recorded strong job gains.
This bodes well for the labor market recovery in 2022.
“If the coming reports match February’s rate of job growth, the economy will recover to pre-pandemic job levels in just four months, marking recovery in a little more than two years since the pandemic struck,” said Glassdoor senior economist Daniel Zhao.
At the same time, there are economic risks linked to Russia’s conflict with Ukraine. Higher oil prices, for example, could cause hiring to slow later this year, warned Joe Brusuelas, chief economist at RSM US.
Wages, inflation and the Fed
Wages were flat in February, after a period of robust growth as employers tried to compete for talent and retain existing staff amid the ongoing labor shortage.
Average hourly earnings stood at $31.58 last month, just one cent higher than in January, breaking with the trend of recent months.
That’s good news for those worried that rising wages will boost already high inflation further, including the Federal Reserve.
Friday’s strong report, including a new Covid-era low for the unemployment rate, means the Fed’s anticipated interest rate increase later this month is highly likely.
The central bank, which is tasked with achieving maximum employment and price stability, has been challenged by rapidly rising inflation during the pandemic. On Wednesday, Fed Chairman Jerome Powell said a quarter-percentage-point rate hike was likely at the bank’s March policy meeting in less than two weeks’ time.