Washington (AFP) – Hiring in the United States was robust in February although unemployment crept up, government data showed Friday, a potentially encouraging sign for policymakers hoping to cool the economy without tipping it into a downturn.
Officials have been walking a fine line trying to bring down inflation by raising interest rates without causing a major blow to the economy. While analysts believed the United States could enter a recession last year, the economy has defied expectations and a surprisingly resilient labor market has helped to support growth.
“The great American comeback continues,” said President Joe Biden in a statement. The world’s biggest economy added 275,000 jobs last month, in an unexpected pickup after January’s figure was revised significantly lower, according to Department of Labor data. Initial estimates put employment growth at 353,000 in January, but Friday’s report pegs the figure now at 229,000.
The numbers point to a “strong labor market,” said Treasury Secretary Janet Yellen on MSNBC. Even though the revisions showed less strength in employment growth, Rubeela Farooqi of High Frequency Economics noted that the market “continues to create jobs at a fast rate.” A “soft landing” for the economy would be positive news for Biden as he seeks reelection in November.
While the jobless rate rose slightly to 3.9 percent, the highest since January 2022, it remains on the lower end when compared with levels over the past decade. Yellen added on MSNBC that there is “no evidence of inflationary pressure coming from the labor market,” another positive sign. Wage growth has edged down, from 0.5 percent in January to 0.1 percent in February on a monthly basis. Compared with the same period a year ago, average hourly earnings were up 4.3 percent, a lower reading than January as well, Labor Department figures showed.
– Fed patience –
“The labor market should continue to cool this year while the unemployment rate should see a slight uptrend but remain relatively low,” said EY chief economist Gregory Daco. He expects that employers will “become increasingly strategic” in attracting and hiring talent, while holding back on pay raises to bring down overall labor costs. But strong job growth could lower the odds of an interest rate cut in May by the Federal Reserve.
Fed policymakers will be “patient” in making changes to the benchmark lending rate, said Kathy Bostjancic, chief economist of Nationwide. The latest report suggests officials could start cutting rates in May, but it is “most likely Fed officials wait until at least the June policy meeting,” she added. Ryan Sweet of Oxford Economics noted that Fed Governor Christopher Waller recently said that he would need to see more months of inflation data before judging if “January was a speed bump or a pothole.” Sweet told AFP that given there are only two inflation reports before the Fed’s policy meeting in May, the central bank “may opt to wait longer than we anticipate” to cut rates.
© 2024 AFP
