(Bloomberg) — Americans are joining the labor force in droves and finding work, casting a vote of confidence in the world’s largest economy even as wages continue to lag behind.
Payrolls grew by 242,000 workers in February, exceeding most economists’ forecasts, figures from the Labor Department’s survey of U.S. employers showed Friday in Washington. The workforce is growing at the fastest pace in more than a decade, the share of the population with a job is the highest since 2009, and the 4.9 percent unemployment rate matched an eight-year low, according to the agency’s separate canvass of households.
The surge in hiring is the best evidence yet that companies are looking past the turmoil in financial markets and weak global growth as American consumers sustain the economic expansion. With the figures indicating there is little spillover from the market volatility that has caused Federal Reserve officials to adopt a more cautious tone, it becomes more likely that policy makers will raise rates again after their next meeting in March.
“This economy is extremely resilient,” said Ward McCarthy, chief financial economist at Jefferies LLC in New York. The Fed will pause in March, but if economic reports continue to come in strong, officials will begin to telegraph a hike for the June policy meeting, he said. “They do want to continue to move away from zero” interest rates.
The health of the labor market will play a role in deciding the race for the White House. While leading Democratic presidential candidate Hillary Clinton can point to economic progress under her party’s leadership, Republican front-runner Donald Trump may steer voters to focus on limited wage growth and companies moving operations overseas because of high corporate tax rates.
There are “fear-mongerers and fact-deniers out there who want people to believe there’s been no job creation to speak of,” Labor Secretary Tom Perez said in a phone interview. But “American businesses are continuing to create jobs and move the country forward, and today’s jobs numbers are proof of that.”
The biggest blemish in the February jobs report was a 0.1 percent drop in average hourly wages. The decline followed a 0.5 percent gain the prior month that had raised hopes of a long- awaited pickup in pay. While the unexpectedly weak reading could have been due to a calendar quirk, it still called into question how quickly workers would benefit from a tightening job market.
The report’s household survey, from which the jobless rate is calculated, did however signal employees may soon get the upper hand in wage negotiations as the pool of those available to work continues to shrink.
The share of the working-age population with a job climbed to 59.8 percent, the highest since April 2009. As unemployed people see family and friends getting hired, it boosts confidence in their own ability to find work. The participation rate, which measures the share of working-age people who are either employed or looking for work, has increased for three straight months, the first time that’s happened since 2006.
Other aspects of the household survey, which can often be volatile, have also been upbeat recently. The labor force has grown by 1 percent over the past three months, the biggest gain over a similar period since early 2000. And most of those people are finding work, with gains in employment averaging 543,000 a month since since December, also the most in 16 years.
“We got a very solid household survey,” said Michael Feroli, JPMorgan Chase & Co.’s chief U.S. economist in New York. “If these slack measures continue to improve, then we gain confidence that over time, we’ll see a return of bigger wage gains.”
– With assistance from Craig Torres.
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