U.S. Economy Adds 311,000 Jobs in February, Exceeding Expectations Despite Deceleration

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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