The economy gained 311,000 jobs in February, more than expected, in another sign that the Federal Reserve’s interest rate hikes have not substantially harmed the strong labor market.
The new figures reported by the Bureau of Labor Statistics on Friday morning provide reassurance about the strength of the economy. The unemployment rate ticked up to 3.6%, which is a low figure by historical standards, as more people entered the labor force.
The stronger jobs report shows that the central bank’s rate hikes aren’t yet having the punch officials want, and it could cause the Fed to lean toward a more aggressive monetary stance at its meeting later this month.
“It’s stronger than expected, although, on a positive note, the unemployment rate edged up … which places the Fed in somewhat of a quandary — what to do next,” Brian Marks, the executive director of the University of New Haven’s Entrepreneurship and Innovation Program, told the Washington Examiner after the report was released.
The reading follows several months of large job gains and the lowest unemployment rates since the 1960s, which have represented key positive economic data that President Joe Biden has touted even as historic inflation cuts deeply into the paychecks of consumers across the country.
BIDEN PROPOSES NEARLY $7 TRILLION TAX-AND-SPEND BUDGET THAT WOULD NOT STABILIZE THE DEBT
The labor market recovery has so far absorbed hits without slowing down, such as mass layoffs in the tech industry and a sudden, sharp downturn in the housing market.
Friday’s report showed strong employment growth at restaurants and bars, as well as in the retail sector. Construction companies also added to their payrolls, showing that the abrupt downturn in housing has yet to filter through to actual job losses.
Fed Chairman Jerome Powell said during congressional testimony this week that hot inflation reports and persistent strong jobs growth could cause rates to go higher and stay there for longer.
Inflation rose in January to a 5.4% annual rate, according to the personal consumption expenditures index, which is the gauge favored by the Fed.
Powell said the information “suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
“Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time,” he added.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
After he spoke, the odds of a larger Fed rate hike of half of a percentage point rose above 60%, according to CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed.
The Fed is next scheduled to meet on March 21-22.
