Last Updated on 05/03/2022 by Nidhi Khandelwal
In February, U.S. hiring increased although wage growth slowed, indicating a healthy job market that will likely keep the Federal Reserve on track to hike rates this month while providing some relief from high inflationary pressures.
After upward adjustments in the previous two months, nonfarm payrolls grew by 678,000 last month, the largest since July, according to a Labor Department data released Friday. The growth was widespread and cross-sectoral. The unemployment rate fell to 3.8 percent, and average hourly wages were unchanged from the previous month.
Research shows that the median forecast was for a 423,000 increase in payrolls and a 3.9 percent unemployment rate.
The employment data, which is the last the Fed will see before its March 15-16 meeting, shows a job market that is progressively improving but still extraordinarily tight. Employers are still scrambling to fill a near-record number of vacancies, making it difficult to meet resilient demand from households and businesses alike. While declining Covid cases and looser restrictions likely helped boost hiring, employers are still scrambling to fill a near-record number of vacancies, making it difficult to meet resilient demand from households and businesses alike.
Labor demand is expected to continue to outstrip supply, slowing job growth and placing upward wage pressure on workers. According to Friday’s statistics, average hourly wages were unchanged in February and up 5.1 percent from a year earlier, a slowdown from the previous month.
The 10-year Treasury note rate fell as traders focused on the flat average hourly earnings statistic. Futures for the S&P 500 continued lower.
Despite the fact that wage growth trailed projections, the Fed’s intention to hike rates this month is supported by solid hiring and a reduced jobless rate. Following Russia’s invasion of Ukraine, which has caused a spike in oil, metals, and grain prices and clouded the US economic picture, Chair Jerome Powell confirmed that approach this week. He believes a 25-basis-point hike should be the first of a series of hikes this year.