Although wage inflation showed indications of slowing, the US economy added employment at a strong rate in February, likely insuring that the Federal Reserve will continue to hike interest rates.
According to the carefully awaited employment report released on Friday by the labour department, nonfarm payrolls climbed by 311,000 jobs in the past month. The number of new jobs added in January was downgraded from the previously estimated 517,000 to 504,000.
Average hourly earnings, a gauge of wages, increased by 0.2 % in February to reach a 4.6 % annual increase, undershooting forecasts.
So, the impact of wage pressure on inflation may be lessening. According to the consumer price index (CPI) and the personal consumption expenditures (PCE) price index, prices increased 6.4 % yearly and 5.4 % annually, respectively, in January.
Economists predicted a 205,000 increase in jobs. They claimed that to keep up with the expansion in the working-age population, the economy must add 100,000 new jobs each month.
Forecasts for payrolls for February ranged from 78,000 to 325,000 jobs.
Payrolls increased more than anticipated, indicating that January’s rise in hiring was not an anomaly.
Several factors, including unseasonably warm weather, annual benchmark changes to the statistics, as well as excessively liberal seasonal adjustment factors—the formula the government employs to remove seasonal swings from the data—had been cited by economists as reasons why January’s job growth was overstated. Seasonal factors also played a role in the robust consumer expenditure growth in January.
Next week in Washington, D.C., the Federal Open Market Committee (FOMC), the Fed’s interest rate-setting body, will meet and announce another rate hike. According to financial business CME’s FedWatch Tool, the bank increased rates by 0.25 percentage points in January, and markets predict the Fed is on track to make another increase of a similar amount next week.
Following a shockingly positive January jobs report in which 517,000 new jobs were added to the economy, the report was released. The January numbers were only marginally (to 504,000) reduced lower.
Since greater labour expenses are typically linked to higher pricing, analysts claim that the Fed will be particularly interested in the slowdown in a pay rise.
“Wage growth [is softening], easing fears of reaccelerating inflation,” ZipRecruiter chief economist Julia Pollak wrote in a study on Friday. “Wage growth was lower than expected, slowing to 3.6 % from 4.4 %on a 3-month annualized basis.”
