The U.S. economy powered its way in February to the biggest gain in jobs since July 2016 but what had appeared to be a long-overdue surge in wage growth lost some momentum.
The Labor Department reported Friday that non-farm payrolls jumped by 313,000 jobs last month, boosted by the largest rise in construction jobs since 2007.
The unemployment rate was unchanged at a 17-year low of 4.1% in February for a fifth straight month as 806,000 people entered the labor force in a sign of confidence in the job market. Economists polled by Reuters had expected a 200,000 gain in jobs and the unemployment rate falling to 4.0%.
“We were able to create enough new jobs to accommodate new seekers and keep the unemployment rate steady,” Ellen Zentner, chief U.S. economist at Morgan Stanley, told The New York Times.
According to Reuters, the February report suggests “the economy remained strong despite weak consumer spending, home sales and industrial production and a wider trade deficit in January that prompted economists to lower their first-quarter growth estimates.”
“The economy is simply too strong,” said Chris Rupkey, chief economist at MUFG in New York. “There’s no reason whatsoever for the Fed to have a stimulative monetary policy at this stage of the business cycle.”
But average hourly pay grew by only 2.6% in February from this time last year, a drop from January’s year-over-year improvement of 2.9%
Year-over-year wage growth “needs to exceed 3.5 percent for a substantial amount of time for workers to begin to claw back losses in the labor share of income they’ve felt during and since the Great Recession,” Elise Gould, a senior economist at the Economic Policy Institute, told The Washington Post.
For the first two months of the quarter, however, average hourly earnings have increased at a 3.3% annual rate, which according to JP Morgan economist Michael Feroli, would make it the strongest quarter of the expansion.
The jobs gain reflected in part the addition of 61,000 jobs in the construction sector as hiring was likely boosted by unseasonably mild weather in February.