The US added 311,000 jobs in February, again better than estimates but still fewer jobs than in January.
Dow Jones estimated 225,000 people would be hired last month.
The unemployment rate went from 3.4 percent to 3.6 percent, still at historic lows, as the country recovers from the COVID-19 pandemic that rocked the economy three years ago this month.
Friday’s government report made it clear that the country’s labor market remains fundamentally sound, with many employers still eager to hire.
Fed Chairman Jerome Powell told Congress this week that the Fed was likely to step up rate hikes if signs continued to point to a robust economy and continued high inflation.
The US added 311,000 jobs in February, again beating estimates but still fewer jobs than in January
President Joe Biden will talk in Philadelphia on Thursday about what’s on his budget
A strong labor market typically leads companies to raise wages and then pass on their higher labor costs to customers through higher prices.
Last month, the government reported a surprise burst of hiring for January — 517,000 more jobs — though that gain was revised slightly downward to 504,000 in Friday’s report.
Consumers also increased their spending in January, suggesting that the economy had picked up at the start of the year.
The Fed’s preferred inflation gauge also accelerated.
With February’s strong job gains coming after January’s expansive rise, the Fed may speed up its rate hikes to fight inflation.
When the Fed tightens credit, it typically leads to higher rates on mortgages, car loans, credit card loans and many business loans.
What the Fed will decide to do about interest rates when it meets later this month remains uncertain.
The decision will rest in part on Friday’s assessment of jobs numbers and next week’s February consumer inflation report.
Last month, the government report on inflation in January had sounded the alarm by showing that consumer prices had accelerated again from month to month.
The strong job growth for January, reported early last month, was the first in a series of reports pointing to an improving economy at the start of the year.
The stronger data reversed a cautiously optimistic narrative that the economy was cooling modestly – perhaps just enough to curb inflation without triggering a deep recession.
Now the economic outlook is hazier.
High borrowing rates have jagged the housing market, with home sales declined for 12 consecutive monthsa consequence of the almost doubling of the average mortgage interest at that time.
Production is also showing signs of weakness. Higher rates have made it more difficult for businesses and consumers to borrow to buy large manufactured goods, from machines to cars to appliances.
In contrast, spending on services – things like travel, eating out and attending entertainment events – remains strong.
Many Americans continue to engage in activities that were restricted during the COVID lockdowns.
Hiring at the February pace is about triple the level the Fed would prefer.
Job growth of about 100,000 per month would be just enough to keep up with population growth and prevent unemployment from rising.
Such a low figure would also mean that employers would not be so desperate for workers and would not have to constantly raise wages.
Of course, a higher salary is great for employees.
But Fed officials say it contributes to higher inflation, particularly in labor-intensive service industries such as restaurants, healthcare and hotels.