Total employment surged in February, according to Bureau of Labor Statistics data released Friday, which showed a gain of 235,000 jobs for the month. Unseasonably warm February weather prompted a hiring spree in the construction industry, the largest gain in nearly 10 years. The manufacturing, private educational services, healthcare and mining industries also reported growth.
The surge in employment “seals the deal” for an interest rate hike from the Fed this week, according to economists. The Federal Open Market Committee is set to meet Tuesday and Wednesday and is widely expected to increase interest rates. With unemployment at a near 44-year low and the stock market surging, the Fed is predicted to bump interest rates a quarter of a percent.
“Hard to see any negative signs in this report. This should put the Fed strongly on the table for next week’s potential tightening,” Tony Bedikian, head of global markets for Citizens Bank said last week.
According to the survey data, the unemployment rate in February remained mostly unchanged at 4.7 percent but was down from 4.9 percent last year. In addition to a wave of hiring, wages are also up after years of stagnant growth. The data shows a 2.8 percent annual increase in hourly earnings, with large metropolitan areas reporting more than twice the annual wage growth of smaller rural communities.
The reported wage increase is close to the 3 to 3.5 percent range many economists say will lift inflation and prompt the Fed to increase rates sooner than previously predicted for this year. The U.S. central bank has forecast three rate increases in 2017.