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Jobs report crushes

American flag times squareMario Tama/Getty

The US economy added many more jobs than expected last month, but wage growth disappointed.

Data out Friday from the Bureau of Labour Statistics showed that nonfarm payrolls grew by 242,000. Economists had estimated a gain of 195,000.

The unemployment rate held steady at 4.9%, an eight-year low, as expected. Meanwhile, the U-6 unemployment rate, which adds those who are working part time for economic reasons, fell to 9.7% from 9.9%.

Overall, the jobs report showed that the labour market remained resilient even as concern mounted about US economic growth.

Strong employment gains were recorded in healthcare, retail trade, and restaurants.

But manufacturing jobs fell by 16,000, more than expected, suggesting that the sector’s slowdown is not over. Mining jobs also tumbled.

There were upward revisions to job gains from the previous two months, with 30,000 jobs added to the original prints for December and January.

Average hourly earnings fell 0.1% month-on-month and rose 2.2% year-on-year, both missing forecasts. Average weekly hours worked came in at 34.4.

But Pantheon Macroeconomics’ Ian Shepherdson said wage growth was consistently underestimated for February because of a calendar quirk in which payday — the 15th of the month — falls outside the employment survey week.

The Federal Reserve is counting on higher wages as one of the factors that will push inflation closer to its 2% goal. Its policy-setting committee — the Federal Open Market Committee — meets later this month and will decide whether to raise interest rates for a second time in this cycle.

“The February employment report is likely to give the Fed confidence that the labour market remains on solid footing while inflationary pressures remain subdued,” BNP Paribas’ Paul Mortimer-Lee and his team said.

The labour-force participation rate — the share of working-age people in the labour force — rose a bit to 62.9% from 62.8%.

Via Bloomberg, here’s what Wall Street expected:

  • Nonfarm payrolls: +195,000
  • Unemployment rate: 4.9%
  • Average hourly earnings month-on-month: +0.2%
  • Average hourly earnings year-on-year: +2.5%
  • Average weekly hours worked: 34.6

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