Employers added 235,000 jobs in February as mild weather and increased business confidence spurred strong hiring for a second straight month, almost certainly cementing a Federal Reserve rate hike next week.
The unemployment rate, which is calculated from a different survey, fell to 4.7% from 4.8%, the Labor Department said Friday, as a large increase in the labor force -- the number of Americans working or looking for jobs -- was more than offset by an even bigger rise in employment
Economists had forecast 190,000 job gains, according to the median estimate of a Bloomberg survey.
Average hourly wages rose 6 cents to $26.09, nudging annual gains back near a seven-year high at 2.8% from 2.5%. Pay increases unexpectedly slowed in January despite minimum wage hikes by 19 states, and many economists predicted the higher base pays and tight market would spur a rebound in February. Pay gains are expected to accelerate as the low unemployment rate forces employers to bid up to attract a smaller pool of workers.
Businesses added 227,000 jobs. Federal, state and local governments added 8,000.
Job gains for December and January were revised up by 9,000. December’s was revised to 157,000 from 155,000, and January’s to 238,000 from 227,000.
Many analysts expected a healthy showing, noting that mild winter weather likely boosted hiring, particularly in sectors such as construction. Other labor market indicators for February seemed to bolster that view. Payroll processor ADP said businesses added 298,000 jobs. Jobless claims have hovered near 40-year lows. And a measure of service-sector employment hit a five-month high. .
At the same time, Goldman Sachs estimated that a federal hiring freeze would reduce government employment gains by 10,000 to 15,000.
Before the report was released, economists said it would take an unusually weak payroll tally to convince Federal Reserve policymakers to put off a rate hike next week that they’ve signaled is all but certain. The Fed raised its benchmark rate in December for just the second time in the past decade, and central bank officials have forecast three rate increases this year to head off a surge in inflation in an improving economy.
The concern about rising prices can partly be traced to the tight labor market that’s forcing faster paycheck gains. That should prompt employers to lift prices to maintain profits.But economists say the worker crunch is also likely to further slow average monthly payroll gains, which fell to 180,000 last year from 226,000 in 2015.