The U.S. economy added 295,000 jobs in February and the unemployment rate fell from 5.7 percent to 5.5 percent, extending the winter’s mounting labor market gains.
The February jobs report released by the Bureau of Labor Statistics exceeded investors’ expectations, which were generally for 230,000 new jobs created.
Revisions for December and January subtracted 18,000 jobs from those months.
The past three months have seen job gains average nearly 290,000, above the 272,000 pace for the past 12 months and nearly a third higher than the rate for 2013.
At 5.5 percent, the unemployment rate is the lowest it’s been since May of 2008.
Friday’s report, however, did not contain the hints of wage growth accelerating that many analysts were looking for. The household survey conducted by the Census Bureau showed that average hourly earnings were up 2 percent on the year, below last month’s mark.
An uptick in wages could be the first sign of a tightening labor market finally translating into bigger take-home pay, after half a decade of mostly stagnant average earnings.
Job creation has surged even despite some factors that could have stalled a broader economic recovery during the winter.
“Inclement weather over the past month, which has coincided with unseasonably cold temperatures across much of the country, could have been a factor weighing on economic activity over the past few weeks,” Deutsche Bank economists Joseph LaVorgna and Brett Ryan wrote before Friday’s release.
Disruptions over a labor dispute at West Coast ports also slowed down work.
But those factors did not appear to weigh down February’s payrolls.
Details from the house hold survey portion of the jobs report, however, suggested a slightly mixed picture.
The labor force participation rate, which measures the share of all working-age Americans with a job or seeking one, ticked down slightly from 62.9 percent to 62.8 percent. The rate has remained relatively stable over the past year, after falling to the lowest levels since the late 1970s during the recession, a dynamic that economists attribute both to the aging of the population and to large numbers of people giving up on searching for jobs.
The number of long-term unemployed, at 2.7 million, did not change appreciably in February, although it is down 1.1 million on the year. In one positive sign, a broader measure of underemployment, the “U-6” rate that takes into account people forced into part-time work or on the edge of quitting the job search, fell from 11.3 percent in January to 11 percent.
Perhaps the most important takeaway from the report, however, was the lack of signs of raises or other wage gains accelerating.
A number of major retailers, including Walmart and TJ Maxx, announced in February that they were raising the lowest wages paid to employees, a development that could reflect broader upward pressure on wages across the economy.
Rising wages is one measure of economic health that Federal Reserve chairwoman and other officials at the central bank have said they are watching out for as an indication that the economy is operating near potential. The Fed is currently watching labor market data to determine when to raise short-term interest rates from zero.
As the unemployment rate drops, wage gains are expected to accelerate. Goldman Sachs economist David Mericle wrote in a note Friday morning that “we expect an acceleration to around 2.75% by year-end, still below the 3-4% rate of wage growth that Fed Chair Janet Yellen has identified as normal.”
Most of February’s job creation, 288,000 positions, took place in the private sector, led by restaurants and bars and support services for business. The mining industry shed over 9,000 jobs, mostly in support activities for miners, as the fallout from plunging oil prices reached U.S. domestic production.
The unemployment rate for black Americans edged up in the month, from 10.3 percent to 10.4 percent. On the year, however, the unemployment rate for black Americans is down 1.6 percentage points.
