Job growth continued its surge in February, this time growing at its strongest rate since July last year, according to the latest release from the U.S. Bureau of Labor Statistics.
Total nonfarm payroll employment increased by 313,000 in February, according to the report. This is drastically higher than ADP and Moody’s Analytics’ predicted increase of 235,000 jobs and up from the general estimated increase of 205,000 jobs. It is also an increase from January’s growth, which came in at 200,000 jobs.
This marks the 89th consecutive month of job growth, and the largest monthly gain since July 2016, according to realtor.com Chief Economist Danielle Hale.
One expert explained this strong jobs growth supports the Federal Reserve’s plans for further interest-rate hikes, but it is unclear what this will mean for mortgage interest rates.
“There will be more Fed hikes in 2018, but impact on mortgage rates are uncertain,” LendingTree Chief Economist Tendayi Kapfidze said. “Labor market growth continues to support the Feds rate hike cycle. However, the Fed hiked three times in 2017 and mortgage rates fell by 33 basis points.”
Another expert agreed, saying the report all but guarantees a rate hike in March, and might even increase the forecast in future rate hikes.
“Today’s employment report for February was quite robust and it again goes to show just how strong the labor market is,” said Steve Rick, CUNA Mutual Group chief economist. “It likely seals the deal for a rate hike by the Fed later this month, and certainly raises the chances that we’ll see four hikes in 2018.”
February’s jobs increase was led by an increase in construction, retail trade, professional and business services, manufacturing, financial activities and mining.
Here are some of the areas which showed major changes in December:
- Employment in construction increased 61,000
- Employment in retail trade increased 50,000
- Employment in professional and business services increased 50,000
- Employment in manufacturing increased 31,000
- Employment in financial activities increased 28,000
- Employment in health care increased by 19,000
- Employment in mining increased 9,000
Employment in other major industries, including wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little change over the month.
“Construction jobs leaped forward to their biggest increase since 2007,” Redfin Chief Economist Nela Richardson said. “This is welcome news for the housing market, where new construction inventory has been held back by labor shortages.”
“But this strong housing signal is clouded by the fact that some of this growth is likely tied to recovery efforts from weather damage in Houston, Florida and California,” Richardson said. “A sustained pickup in construction jobs this year may partially offset headwinds caused by new construction costs from recent tariffs on lumber and now steel.”
But while construction jobs are seeing growth, one expert explained job openings remain at historic highs.
“For slower home price growth, more home construction is needed,” said Lawrence Yun, National Association of Realtors chief economist. “Job openings in the construction industry remain at historic highs. It is now a matter of providing necessary skills to go into the industry.”
The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in February.
Average hourly earnings also increased, rising $0.04 to $26.75 per hour. This follows a gain of $0.07 per hour in January. Over the year, average hourly earnings have increased a total of $0.68.
But while wages increased in February, many experts were expecting more.
"The February jobs report will be well received in many corners,” said Curt Long, National Association of Federally-Insured Credit Unions chief economist. “Job growth surprised to the upside, while wage growth fell below expectations.”
“The latter should help allay concerns that a surge in inflation is imminent, but it still keeps the Fed on track to raise rates later this month,” Long said.
The unemployment rate remained unchanged in February at 4.1%, and the number of unemployed persons remained essentially unchanged at 6.7 million, according to the report.
And for one expert, February’s report was “as good as it gets.”
“The February jobs report was as good as it gets, with the establishment survey showing the largest monthly job gain since July 2016, solid upward revisions for the prior two months, a rebound in the average workweek, and most of all, no runaway wage acceleration,” Fannie Mae Chief Economist Doug Duncan said. “Not to be outshined, the household survey reported a massive gain in employment amid a rise in the labor force participation rate, which posted the biggest one-month jump since April 2010.”