Employers during February added over 235,000 new jobs, said the Department of Labor on Friday. The hefty increase clears the way for the U.S. Federal Reserve to raise its interest rate during next week’s meeting.
The jobless rate dropped to 4.7% while the hourly earnings average increased by 0.2%. This report is from the first full month President Trump has been in office.
One economist said the Fed was ready to raise its rates after the jobs report showed such a hefty increase of new jobs. Economists were expecting an increase of approximately 200,000 jobs for February.
Although some areas of the U.S. labor market are still weak, the jobless rate sits at a level the Fed considers to be full employment, a threshold in which, in theory, everyone who wants to work can find a job.
Jobless claims have reached a low of 44 years, the stock market continues its surge and consumer spending has increased, helping to bolster a case for those arguing that the economy remains strong enough to take on an increase in interest rates.
Employers and recruiters complain qualified workers remain a scarcity, pushing them into raising wages, making benefits stronger and offer more amenities at the workplace.
A war is on for talent, said one staffing company official. Some people have accepted positions only to walk away from them before the first day because another position was given to them for higher wages or better overall benefits.
Even workers at the lower skill positions in certain sectors have found themselves more in demand. The wage gains year over year for cashiers and store managers for example were over twice what the national average was, said an economist on Wall Street.
Larger paychecks are one thing many Americans, after a number of years of little growth, are very eager to see. The Fed has waited for this type of increase, but it is wary as well of wages going up too quickly.
The Fed wants to head off an incipient inflation and therefore have started to slowly increase rates, which makes risk taking and borrowing more expensive.
Meanwhile, the Fed also wants to avoid stopping job hiring, especially because the benefits of a recovery of eight years have been distributed so unevenly.
However, a balancing act of the two goals can be very tricky and that is what the Fed is trying to perfect.