By Geoffrey Smith
Investing.com -- The U.S. economy created far more jobs in February than expected, picking up steam again after a brief soft patch due to the winter wave of Covid-19.
The Labor Department said 678,000 nonfarm jobs were created in the month through mid-February, nearly 70% more than the 400,000 consensus forecast. The unemployment rate fell to 3.8% from 4.0% as a result and now stands at its lowest since the start of the pandemic.
However, wage growth decelerated, partially easing the pressure on the Federal Reserve to tighten monetary policy. Average hourly earnings growth slowed to 5.1% on the year from a downwardly revised 5.5% in January. Expectations had been for an acceleration to 5.8%. Average hourly earnings tend to be highly influenced by developments in lower-paying service sector jobs.
"After January's surprising report, today's report provides reassurance that the job market recovery remains strong," said Glassdoor economist Daniel Zhao via Twitter (NYSE:TWTR). Zhao noted that the gains were encouragingly broad-based, and that employment in professional and business services, as well as in transportation and warehousing "are now solidly above pre-pandemic" levels.
The numbers are likely to cement expectations that the Federal Reserve will raise interest rates later this month, validating two days of testimony in Congress by Fed Chair Jerome Powell who said that the U.S. labor market and the economy in general were strong enough to justify withdrawing the extraordinary stimulus that has been in place since the outbreak of Covid-19 two years ago.
Chicago Fed President Charles Evans told CNBC that job growth "has been good for some time now" and repeated that "we need to move to a more neutral monetary policy."