The Labor Department released its latest hiring and unemployment figures on Friday morning, providing one of the better snapshots of the state of the American economy.þþ■ 313,000 jobs were added last month, the most since October 2015 and the 89th straight month of gains, a record. Economists had anticipated a gain of about 200,000.þþ■ The unemployment rate was 4.1 percent, the same as in January and still a 17-year low.þþ■ The average hourly wage grew by 0.1 percent. It grew by 0.3 percent in January. The year-over-year increase fell to 2.6 percent from 2.9 percent.þþThe TakeawayþAn extraordinarily strong jobs report in February clears the way for the Federal Reserve Board to raise the benchmark interest rate when it meets this month under its new chairman, Jerome H. Powell.þþ“I love it,” said Ellen Zentner, chief United States economist at Morgan Stanley.þþ“We saw a flood of job seekers into the market,” she said. “We were able to create enough jobs to accommodate new seekers and keep the unemployment rate steady.”þþAlthough the drop in year-over-year wage growth to 2.6 percent is a bit disappointing to workers, the lower figure eased concerns about inflation. And as Ms. Zentner pointed out, “The upward trend remains in place.”þþJob growth has been consistently strong. With revisions to previous months, the three-month average job growth was 242,000 a month. The labor force grew by 806,000, pushing the labor force participation rate back up to the 63 percent mark. At the same time, other information released by the government this week showed initial jobless claims still near their lowest level in almost 50 years, suggesting layoffs are down and employers are trying to hold on to their workers.þþFor Wall Street, the strong job growth and modest rise in wages is a dream report.þþThe jump in average hourly earnings in January — which pushed the year-over-year figure to 2.9 percent, from 2.3 percent just three months earlier — was cited as a cause of a market sell-off.þþThat increase fueled inflation worries on Wall Street and speculation that the Fed might raise rates at least four times this year, rather than the three increases expected. “A strong jobs report with less wage inflation tells the market that current concern about wage issue is overblown,” said Jonathan Golub, chief United States equity strategist at Credit Suisse. “The market has to think that is terrific.”þþWhile some companies have prominently announced worker bonuses this year after the signing of the tax bill, those kinds of rewards — as opposed to pay raises — are not counted in the average hourly wage calculations by the Bureau of Labor Statistics.þþWith President Trump’s move to put tariffs on steel and aluminum imports and growing talk of a trade war, February’s numbers could establish a baseline to measure the impact of trade restrictions and retaliation over the coming months.þþBidding for WorkersþCorporate executives have long complained about the difficulty of finding workers, particularly in sectors like construction and trucking. Economists have generally reacted with skepticism, arguing that if there were really a shortage of qualified workers, companies would be raising pay to compete for talent. There are growing signs that this is at last the case.þþ“For years and years, the trucking companies said they couldn’t find drivers, but they wouldn’t raise wages,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “Well, now they are.”þþCompetition for drivers has become fierce. Ms. Swonk said she had heard reports of trucking companies paying drivers six-figure salaries, plus $20,000 signing bonuses to lure them from competitors. Companies are also offering to train new drivers — even though many end up being poached by other companies. “They’re still losing them to other places,” Ms. Swonk said.þþAs for the construction industry, Jed Kolko, chief economist at Indeed, an online recruiting site, noticed a significant increase in job postings over the past week without a corresponding response from applicants.þþ“It’s a good example of where demand on the employer side is going, but it’s not being matched by job-seeker interest,” he said.þþThe mismatch could grow significantly under Mr. Trump’s plan to encourage local, state and private investment in infrastructure. “If there is public interest in infrastructure, where do workers come from?” Mr. Kolko asked. “Does that end up bidding up construction wages and competing with other kinds of construction activity already underway?”þþThose Left BehindþIn contrast to the multiple indicators of a tightening labor market, a persistent lack of employment among large numbers of working-age men continues to shadow the economy.þþAlthough large economic differences across regions have always been a characteristic of the United States, that gap appears to be widening instead of narrowing. In a paper published in the latest edition of the Brookings Papers on Economic Activity, the economists Benjamin Austin, Edward Glaeser and Lawrence H. Summers argue that the disparities are sharp among three regions: the prosperous coasts; the Western heartland, which has natural resources and higher education levels; and the Eastern heartland.þþThis last area, which extends from Mississippi to Michigan, generally east of the Mississippi and not on the Eastern Seaboard, is suffering from a glut of social and economic ills, including joblessness, disability, opioid-related deaths and rising mortality, the three Harvard University economists said.þþ“The income and employment gaps between three regions are not converging, but instead seem to be hardening,” they write. “America appears to be evolving into durable islands of wealth and poverty.”þþRather than moving to higher-income areas to take advantage of the increased employment opportunities, people remain stranded in areas that are economic dead ends. There are many theories about the cause, but rising housing costs certainly deter moving, as does the difficulty of transferring assistance like Medicaid across state lines.þþA lack of employment is a greater problem than income inequality, they argue, citing evidence that suggests “misery haunts the lives of the long-term not working.”
Source: NY Times
