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U.S. employers surpassed economists' forecasts with the addition of 313,000 jobs in February, according to the latest employment report from the U.S. Bureau of Labor Statistics.
It was the largest gain in jobs since July 2016 and the 89th straight month of gains. Economists had anticipated growth of about 200,000 new jobs for the month.
"This was a great jobs report for markets, with strong growth and a complete pullback on inflation fears," said Josh Wright, chief economist for talent acquisition system platform iCIMS, based in Matawan, N.J.
"February's job report was remarkably strong," agreed Jed Kolko, chief economist for global job search engine Indeed. "The payroll gain was the largest in over a year … blue-collar sectors drove these gains, led by mining and construction. Manufacturing is now outpacing the economy overall, and even retail had a strong month."
Construction firms added 61,000 jobs in February, surprisingly strong for this time of year, noted Cathy Barrera, the chief economist for ZipRecruiter, an online employment marketplace based in Santa Monica, Calif. Most of the increase was among specialty trade contractors (+38,000).
Retail jobs increased by 50,000 over the month and manufacturers added 31,000 jobs, continuing the sector's growth since the second half of 2017. "We should definitely expect some job gains within the steel and aluminum industries," Barrera said, referring to President Donald Trump's recent announcement to place tariffs on steel and aluminum imports. "However, there are many other manufacturing industries that use steel and aluminum as inputs. Raising prices on those inputs could have a significant impact on employment in those downstream industries, which is something to be wary of. I'm concerned that this potential for job loss could outweigh any job gains we might see in steel and aluminum."
Employment in mining rose by 9,000 in February, with most of the increase in support activities (+7,000). Since a recent low in October 2016, mining has added 69,000 jobs. Employment in health care continued to trend up in February (+19,000), with a gain of 9,000 new jobs in hospitals. Health care has added 290,000 jobs over the past year.
Andrew Chamberlain, chief economist at Glassdoor, said that the higher-than-projected surge of jobs is likely a result of President Donald Trump's tax law signed in December that cut back corporate rates.
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The unemployment rate for February was 4.1 percent, an 18-year low. It has been steadily declining since a peak of 10 percent in 2009.
Unemployment dropped significantly from the previous month for blacks (7.7 percent to 6.9 percent). The jobless rates for adult men (3.7 percent), adult women (3.8 percent), teenagers (14.4 percent), Asians (2.9percent), Hispanics (4.9 percent) and whites (3.7 percent) stayed about the same.
The number of long-term unemployed (those jobless for 27 weeks or more) was reported at 1.4 million in February and accounted for 20.7 percent of the unemployed. "The long-term unemployment rate is down to 2008 levels," Kolko said. "The roaring labor market brought more people back to work. The most important household measure—the prime-age employment-population ratio—jumped to 79.3 percent, its highest level in almost a decade."
Still, growth is getting closer to its limits, he added. "With low population growth, recent payroll gains can't be sustained longer-term, and concerns about tariffs have injected more short-term uncertainty into the jobs picture, especially for the rebounding manufacturing sector."
The labor force grew by 806,000, pushing the labor participation rate up 0.3 percent to 63 percent. Not all slack is going away, however, Wright pointed out. "The underemployment rate was unchanged at 8.2 percent, as involuntary part-time work rose by 171,000. Contingent and part-time work are two 'new normal' changes that are not going away."
Average hourly pay grew by 2.6 percent year-over-year, a bit disappointing following January's gain, yet easing inflation concerns. "I wasn't too surprised about the pull back on wage growth this month—this number is more in line with what I expected than last month," Barrera said. "I believe the tightening of the labor market in 2017 will be reflective in that wage growth number in 2018. It takes a bit of time for employers to respond to increased competition."
Wright noted that on net, wage gains appear unchanged relative to 2017.
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