U.S. economy grew by 235000 jobs in February
Employers added 235000 workers to their payrolls in February, the government reported on March 10, 2017, a hefty gain that clears the path for the Federal Reserve to raise its benchmark interest rate when it meets next week
The official jobless rate fell to 4.7 %, from 4.8 % in January, while average hourly earnings grew by 0.2 % in a report that overlaps with President Trump’s first full month in office.
“They’re ready to go,” said Diane Swonk, founder and chief executive of DS Economics, referring to the central bank’s expected vote next week to raise rates from their historically low levels.
President Trump, who had dismissed the official jobs reports as phony when he was a candidate, reposted a comment on Twitter from the conservative website Drudge Report that said “GREAT AGAIN: +235000.” And Sean Spicer, his press secretary, said it was “great news for American workers” in the “first report for @POTUS Trump.”
Although the economic anxiety that helped put President Trump into the White House remains, the official jobless rate is near what the central bank considers full employment — a threshold where, in theory at least, everyone who wants a job at the going rate can find one.
At the same time, jobless claims are near a 44-year low, the stock market is surging, and consumer spending is growing, bolstering the case for those who argue the economy is strong enough to withstand a rate increase.
Particularly significant in February was the bump up in the labour participation rate to 63 % – 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,” Swonk said.
On the other end are employers who are seeing acute labour shortages. “They offering training programs now,” she said. “They’re complaining about it. That’s what tight labour markets do. It forces you to invest more to work with less.”
Recruiters and employers complain that qualified workers are scarce, pushing them to raise wages, strengthen benefits and offer cushier amenities at the office. “There is a war for talent,” said Lauren Griffin, senior vice president at Adecco Staffing USA. “We’ve got people in orientation classes and they get up and leave because they’re contacted about another job that might be more money.”
Even lower-skill workers in some sectors are finding themselves in more demand. The year-over-year wage gains for store managers and cashiers, for example, were twice the national average, said Andrew Chamberlain, chief economist at Glassdoor, a career website.
Bigger paychecks are something that most Americans, after years of stagnant wage growth, are particularly eager to see. The Federal Reserve, 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 and so have begun to slowly raise rates, which makes borrowing and risk-taking more expensive. At the same time, the Fed wants to avoid putting the brakes on job hiring, especially because the benefits of the eight-year-old recovery have been so unevenly distributed.
Balancing those two goals is tricky. 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 % but is still high given how tight the labour market otherwise looks.
Cautioning the Fed against moving too quickly with a rate increase, Elise Gould, an economist at the left-leaning Economic Policy Institute, noted: “Workers throughout the economy, including young workers, workers of colour, and low-wage workers, need a chance to make up lost ground on wage growth. To that end, the Federal Reserve needs to keep their foot off the brakes and let the labour market reach full employment.”
Where you live and what you do for work can determine how bright your economic prospects are. Those who reside in or near larger cities are receiving the highest gains, despite high housing costs. Large metropolitan counties have seen more than twice the annual wage growth of nonmetropolitan areas, according to the latest figures from the Bureau of Labour Statistics.
“Higher-wage jobs might be following educated, young workers, who are increasingly living in dense, urban neighbourhoods as other demographic groups move to the suburbs,” said Jed Kolko, chief economist at the job-search site Indeed. “Broader economic shifts also favour big cities: The occupations projected to grow tend to be more urban, while shrinking sectors like manufacturing and farming tend to be located outside large metros.”
That is disappointing for people with longstanding ties to smaller, more rural communities. “A lot of this has to do with mobility,” said Steven W. Rick, chief economist at CUNA Mutual Group, an insurance company. “People are going to have to move where the jobs are and not expect the jobs to come where they are.”
If some are in the wrong place, others lack the right skills for an economy heavily geared toward information and services. “There is a certainly still a talent shortage out there,” said Michael Stull, senior vice president at Manpower North America, a staffing agency. The firm’s annual survey of 2,200 hiring managers showed that 46 % reported they had difficulty filling job vacancies in 2016, up from 32 % in 2015.
Anticipation of a rollback in taxes and regulations as well as the possibility of vast infrastructure spending has drummed up optimism among employers and blue-collar workers.
There are potential headwinds, though. Dissension among Republicans and unpredictability about President Trump’s course in several policy areas could constrain the hiring outlook.
The future of the Affordable Care Act and a possible replacement is making hospitals and community health centres cautious about adding to their staffs. And a strong dollar and a potential backlash against the White House’s travel ban could slow tourism, and thus hiring in the sector. Mr. Trump’s across-the-board hiring freeze on federal government jobs, combined with declines at the state level, is likely to keep down the number of public sector employees.
The uncertainty extends to prospects for tax cuts. Some Wall Street analysts, expecting delays, have pared down their growth forecasts for 2017, after recently raising them.
For the moment, though, optimism about the job market remains strong. “The economy is riding a wave of bullish sentiment postelection,” Mr. Chamberlain of Glassdoor said. “We’re seeing strong labour demand across the board and no sign of slowing right now.”