The U.S. economy added 311,000 jobs in February, exceeding expectations and signaling a hot employment market, according to the Labor Department. Though job creation decelerated from January’s unusually strong 504,000 gain, the February number was above the Dow Jones estimate of 225,000. The unemployment rate rose to 3.6%, higher than the expected 3.4%.
However, average hourly earnings rose 4.6% from a year ago, below the estimate of 4.8%, and the monthly increase of 0.2% was below the estimate of 0.4%.
Leisure and hospitality led gains, with an increase of 105,000, while retail saw an increase of 50,000, government added 46,000, and professional and business services saw an increase of 45,000. However, information-related jobs declined by 25,000, and transportation and warehousing lost 22,000 jobs for the month.
The jobs report comes at a critical time for the U.S. economy and the Federal Reserve policymakers. The Fed has raised its benchmark interest rate eight times over the past year, bringing the federal funds rate to a range of 4.5%-4.75%.
While the Fed slowed down the pace of its rate hikes in February due to cooling inflation data, Fed Chairman Jerome Powell warned Congress this week that recent metrics show inflation is back on the rise. Powell expects rates to rise to a higher level than previously expected, citing the tight labor market as a reason for continued rate hikes.
Despite Powell’s remarks, the jobs report signals a healthy employment market, with job creation exceeding expectations despite deceleration.
The report provides some relief to markets after Powell’s comments triggered a sell-off in stocks and widened the gap between 2- and 10-year Treasury yields, a phenomenon known as an inverted yield curve that has preceded post-World War II recessions.
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