American firms created the most new jobs in nineteen months as workers returned to the labor force in the greatest number in more than seven years while wage increases cooled from last month's post-recession high.
Payrolls rose 313,000 in February, far more than the 200,000 median forecast from economists, and the prior two months were revised 54,000 higher, reported the Labor Department on Friday. The unemployment rate was steady at 4.1 percent for the fifth month. The labor force participation rate climbed 0.3 percent to 63.0, the largest one month gain since April 2010 as the number of employed rose 785,000.
Average hourly earnings improved 2.6 percent on the year, they had been predicted to rise 2.8 percent, and January's 2.9 percent gain was revised down to 2.8 percent. Earnings rose 0.1 percent in February, less than the 0.2 percent estimate, after January's 0.3 percent gain.
Stock rose smartly with the Dow up more than 300 points in the early afternoon, and bond yields edged higher on the indication that the labor market remained vibrant and that job prospects were inducing many unemployed people to return to the search for work.
The currency markets however, seemed to take the opposite view as the dollar slipped marginally against the euro and the yen. The focus for the foreign exchange market is likely that the lower than expected annual wage increase and continuing wage restraint from the historically low participation rate will keep the Federal Reserve from accelerating the pace of its rate increases.
Fed governors are expected to raise the Fed Funds rate 0.25 percent to 1.75 percent when they meet on March 20-2. It will be the first FOMC meeting under the new Chairman Jerome Powell.
In December the central bank projected a 1.9-2.4 percent Fed Funds rate at the end of this year, implying three 25 basis point increases from its current 1.5 percent.
The average work week rose 0.1 to 34.5 as the prior month was revised to 34.4 from 34.3 hours.
Job gains were widespread and particularly strong in manufacturing which gained 31,000 positions. The three month moving average of new factory employment climbed to 31,667, the highest sustained number of new workers in 21 years. Construction trades added 61,000 jobs, service work rose by 187,000, including 50,000 in retail stores.
Private payrolls increased 287,000, following January's 238,000 gain; government at all levels added 26,000.
The U-6, or underemployment rate which counts workers as unemployed who have looked for work in the past twelve months or are working part-time but want full-time work, remained at 8.2 percent. The more common U-3 rate cited above at 4.1 percent only counts people as unemployed if they had looked for a job in the month prior to the survey.
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