United States: Labor market report calls for a rate hike
March 10, 2017
February marked another month of strong growth in employment. Non-farm payrolls grew by 235,000 jobs and followed the upwardly revised increase of 238,000 jobs in January (previously reported: +227,000). February’s result overshot the 215,000 new jobs the markets had expected and while unusual warm weather may have boosted job creation in February, the data coincided with President Donald Trump’s first full month in office and rising economic optimism. The figure also validates recent comments by FOMC officials that hinted a likely interest rate hike at their 14-15 March meeting.
The jobless rate fell from 4.8% in January to 4.7% in February, reflecting strong job creation and despite the fact more people had joined the workforce. The labor participation rate inched up from 62.9% in January to 63.0% in February—the highest participation rate in 11 months.
February’s result suggests that the U.S. economy is gradually approaching full employment and job creation continues to be driven entirely by the private sector, adding 227,000 new jobs, while the public administration added 8,000 jobs. While analysts expect job creation to slow as the economy nears full employment, President Donald Trump has promised to bring more people back into the labor market and boost wages through tax cuts, infrastructure spending and fewer regulations.
Author: Ricardo Aceves, Senior Economist