WASHINGTON: US job growth surged in February, recording its biggest increase in more than one and a half years, but a slowdown in wage gains pointed to only a gradual increase in inflation this year.
Non-farm payrolls jumped by 313,000 jobs last month, boosted by the largest rise in construction jobs since 2007, the Labour Department said yesterday. The payrolls gain was the biggest since July 2016 and triple the roughly 100,000 jobs the economy needs to create each month to keep up with growth in the working-age population.
The labour market is benefiting from strong domestic
demand, an improvement in global growth as well as robust US business sentiment following the Trump administration’s $1.5 trillion income tax cut package that come into effect in January.
Average hourly earnings edged up four cents, or 0.1 per cent, to $26.75 in February, a slowdown from the 0.3pc rise in January. That lowered the year-on-year increase in average hourly earnings to 2.6pc from 2.8 percent in January.
The unemployment rate was unchanged at a 17-year low of 4.1pc in February for a fifth straight month as 806,000 people entered the labour force in a sign of confidence in the job market. The average workweek rebounded to 34.5 hours after falling to 34.4 hours in January.
With Federal Reserve officials considering the labour market to be near or a little beyond full employment, the moderation
in wage growth last month did little to change the view that the US central bank will raise interest rates at its March 20-21 policy meeting.
Slow wage growth, however, could temper expectations the Fed will raise its rate forecast to four rises this year from three. There is optimism that tightening labour market conditions will spur faster wage growth this year and pull inflation toward the Fed’s 2pc target.
Economists polled by Reuters had forecast payrolls rising by 200,000 jobs last month and the unemployment rate falling to 4pc. Average hourly earnings had been expected to increase 0.2pc in February. Data for December and January was revised to show the economy adding 54,000 more jobs than previously reported.
The employment report suggested the economy remained strong despite weak consumer spending, home sales, industrial production and a wider trade deficit in January.