MINNEAPOLIS (CNN) The U.S. economy added 311,000 jobs in February, according to the Bureau of Labor Statistics’ latest monthly employment snapshot released on Friday.
That’s a setback from January’s blockbuster jobs report, which added a revised 504k jobs, but shows the job market is still blowing a lot of heat.
The unemployment rate rose from 3.4% to 3.6%.
Net job gains in February beat economists’ estimates for a more modest month, adding just 205k. Regardless, the downward revisions to the December and January totals were not that drastic.
While Friday’s report is strong, it’s actually bad news in the broader context of the Federal Reserve’s campaign to curb high inflation, said Gus Faucher, chief economist at PNC Financial Services.
“It’s way hotter than the economy can run and that means the Fed has to keep raising interest rates,” he told CNN. “And that makes a recession more likely.”
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Barring a surprise-low CPI inflation report next week, Faucher said he expects the Fed to hike at its 21st point meeting.
The Fed has been struggling to slow the economy and break the highest inflation in 40 years for nearly a year, but the labor market continues to resist those efforts.
“On the one-year anniversary of the Fed’s first rate hike, we never thought the economy would add 311,000 more jobs this month,” FwdBonds chief economist Chris Rupkey said in a statement. “The party is on and the job market is having a blast. The economy is clearly not landing, it is rising.”
Monthly job gains remain well above pre-pandemic norms, when around 180,000 jobs were added monthly between 2010 and 2019, BLS data shows. However, the labor market remains tight and imbalances persist in ongoing efforts to recover from the devastating pandemic.
Labor turnover data released earlier this week for January showed there were 1.9 job openings for every person seeking one. Fed Chair Jerome Powell has frequently highlighted that the labor market is falling more than 3 million people short of pre-pandemic growth projections.
The pandemic accelerated expected demographic trends (the aging of the massive baby-boomer generation) with increasing retirements; People also left the workforce due to care-related needs and health concerns such as long Covid; and there were hundreds of thousands of workers who died from Covid.
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The February jobs report showed the participation rate rising 0.1 percentage point to 62.5% – the highest level since April 2020. However, it remains below the pre-pandemic level of 63.4%.
In addition, there was some upward movement in the unemployment rate, which rose 0.2 percentage points to 3.6%.
“Contributing to the upward pressure here is that more people were looking for work,” said Mark Hamrick, senior economic analyst at Bankrate.
Sectors with notable job gains included leisure and hospitality, retail, government and healthcare. After being crushed during the pandemic, the leisure and hospitality industry has steadily hired new staff and tried to meet increased demand from consumers who have shifted their spending from goods to services.
Average hourly earnings — a closely watched metric as the Fed seeks to assess the impact of rising wages on inflation — rose 0.2% mom and 4.6% year-on-year.
