CNBCJob creation boomed in February by 295,000 despite the brutal winter conditions, and the unemployment rate dropped to 5.5 percent, the Labor Department said Friday.
Despite the strong month, the picture was essentially the same for the American worker: Pay rose just 3 cents an hour, representing a 2.0 percent annualized gain as wage inflation remained elusive after a big jump in January. The average work week was unchanged at 34.6 hours.
Bars and restaurants represented the biggest growth area, adding 59,000 positions, while professional and business services grew by 51,000. Construction added 29,000 and health care increased 24,000.
The total actually represented a decline from the previous month, which was unrevised at 329,000. December’s number fell from 239,000 to 257,000.
Analysts had been expecting the report to show U.S. employers added 240,000 jobs in February. Consensus estimates also saw the unemployment rate ticking down to 5.6 percent from January’s 5.7 percent. Job creation had been averaging 266,000 over the previous 12 months.
“The upside surprise should no longer be a surprise because, despite what many pessimists wish to believe, the economy is expanding at a healthy clip and creating high variety jobs again,” said Todd Schoenberger at LandColt Capital.
A broader measure of unemployment that includes those who have stopped looking as well as those working part-time for economic reasons—the underemployed—fell from 11.3 percent to 11.0 percent. The headline rate fell to its lowest level since May 2008.
The labor force participation rate, after gaining in January, fell one-tenth to 62.8 percent, which is just off the lowest level since 1978. The continued sharp decline of the rate has been a contributor toward the decline of the headline number, which peaked at 10 percent in 2009.
Full-time jobs increased by 123,000 while part-time positions declined by 75,000. Total employment increased y 96,000 while the ranks of the unemployed dropped 274,000.
Stocks showed little reaction to the report, with futures indicating a mildly negative open on Wall Street. The dollar rose against the euro, while government bond yields were higher, with the benchmark 10-year Treasury note near 2.18 percent.
Investors will be left to digest what the strong headline numbers will do for monetary policy. The Federal Reserve is expected to increase rates later this year, with employment and inflation targets key. While job creation continued apace, the low level of wage inflation could give the Fed reason to keep rates near zero.
Jim Paulsen, chief market strategist at Wells Capital Management, said the current pace of unemployment is trending below 5 percent, putting pressure on the Fed to move.
“I just can’t imagine a Federal Reserve in this country arguing that we should have a zero interest rate structure when we have a sub-5 percent unemployment rate, or on the doorstep,” Paulsen told CNBC.
What are these people smoking? Are they trying to kid us or each other? Yeah, I’ve seen jobs advertised, PT grocery clerks and waitresses for people with degrees or who used to have manufacturing jobs before they went to China or India. The real unemployment rate is in excess of 20%, maybe way in excess of 20%. The economy is getting better? Maybe for bankers and hedge fund operators.
The kool-aid needed some sweetener. Look for more artificial sweetener in the coming months..i.e wage growth, core inflation picking up, further unbelievable job growth (hospitality and..well you know all those great paying kind of jobs) and such. The Fed (our fiat money creators and manipulators of the cost of money which the market today is fearing withdrawal from ) know that in order to prepare their empty tool box for the next coming “official” recession that awaits down the line that the picture needs more of this kind of propaganda so rates can rise and leave the ZIRP and then when the economy takes the next big dump (you know the official one that we unofficially never really left) they can lower rates to encourage economic activity and business investment which is at present is still mediocre (imho). Then again I’m having a bad day so don’t go by what I say
I just frickin love this BS, post 295,000 job gain. They never really say what these jobs are, but in reality they are mostly part time service jobs. They also never mention the job loss and give us a net job gain/loss. The reality is we had a net job loss and the jobs gained were not strong, reliable middle class jobs you could support a family on. Such BS, I can’t believe they expect us to believe their lies.