The February jobs numbers are in and it's another strong set of numbers: 295,000 jobs added for the month, and the jobless rate dropping to 5.5%.
Employers added 295,000 workers to their payrolls last month, more than forecast, and the unemployment rate dropped to 5.5 percent, the lowest in almost seven years, figures from the Labor Department showed Friday in Washington. Hourly earnings rose less than forecast.
The report underscores a lingering appetite among companies to boost headcounts as increased purchasing power from cheaper fuel supports consumer spending. While the jobless rate reached Federal Reserve policy makers’ range for what they consider full employment, a missing link continues to be faster wage growth that will be needed to ensure household purchases accelerate.
“These were solid job gains,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, whose forecast for a 280,000 gain was among the closest in the Bloomberg survey. “You’ve got a very strong economy.”
Stocks declined as the report fueled speculation the Fed is moving closer to raising interest rates. The Standard & Poor’s 500 Index fell 0.4 percent to 2,093.23 at 10:41 a.m. in New York. The yield on the benchmark 10-year Treasury note jumped to 2.24 percent from 2.12 percent late on Thursday.
The median forecast in a Bloomberg survey of economists called for a 235,000 increase in employment. Estimates in the Bloomberg survey ranged from 150,000 to 370,000.
The jobless rate was projected to drop to 5.6 percent from January’s 5.7 percent.
The problem at this point is that hourly wages are continuing to stagnate. The other issue: the numbers are looking like there may finally be an interest rate hike in the future.
A stronger-than-forecast U.S. payrolls report strengthens the argument for the Federal Reserve to begin raising interest rates in June, after the jobless rate reached the range that officials view as full employment.
The jobs report looks “unambiguously strong” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. “June is still the base case” for rates to rise, he said. “The probability of September is falling rapidly.”
Fed Chair Janet Yellen last week began to prepare investors for an increase this year, without saying that a move was imminent. She signaled in testimony to Congress that the Fed may drop its pledge to be “patient,” which would mean that rates could be raised at any meeting.
That language is more likely to be dropped after Friday’s jobs report, said Aneta Markowska, chief U.S. economist at Societe Generale SA in New York.
So we'll see where things go from here. THe economy however is getting better, and one has to wonder how much better it would be if Republicans hadn't been blocking jobs bills for the last six year just to hurt President Obama.