WASHINGTON -- Hiring surged last month as U.S. employers generated the most new jobs since mid-2016, the Labor Department said Friday, but wage growth slowed as long-awaited gains in worker pay have yet to take permanent hold.
The unemployment rate held steady at 4.1 percent, the lowest since 2000, as the labor force swelled by 806,000. That was the biggest increase since 2003 and indicated more people were coming off the labor market sidelines to look for work.
The 313,000 net new jobs added in February far exceeded analyst expectations and were a major increase from the previous month's upwardly revised 239,000 figure. Job growth for December and January was revised up by a total of 54,000 net new positions, meaning the economy has added a robust average of 242,000 jobs the past three months.
Investors celebrated the news, sending the Dow Jones industrial average up 440.53 points Friday. The muted wage growth is a relief to Wall Street, because faster raises could spur higher inflation and additional interest rate increases from the Federal Reserve.
"Three letters: wow," said Mark Hamrick, senior economic analyst at financial information website Bankrate.com, of the jobs report. "Certainly to see more than 300,000 jobs added in a month in this point in the economic cycle ... is a stunner."
Marc Short, the legislative affairs director for the White House under President Donald Trump, called the jobs report "exciting."
"We think that this economy is humming along," he told Bloomberg TV, giving some credit to the tax cuts that took effect at the start of the year.
The February job growth was driven by big jumps in hiring in construction, which added a net 61,000 jobs, and retail, which increased its payrolls by 50,300. Mild weather in much of the nation last month could have added to the construction gains.
But Jed Kolko, chief economist with employment website Indeed.com, does a monthly calculation excluding weather-sensitive industries -- construction, mining and leisure and hospitality -- and said his figures show there was no impact last month.
The 229,000 net new jobs added when factoring out those sectors was the best since July 2016, he said.
"It was a very strong jobs report ... stronger than what we should all expect at this stage of a recovery," Kolko said. The current nine-year economic expansion is the second-longest in the nation's history, and by midsummer would be the longest.
But there was a downside in the jobs report that economist Douglas Holtz-Eakin, president of the conservative-leaning American Action Forum think tank, called its Achilles' heel: Wage growth slowed in February.
Average hourly earnings increased 4 cents to $26.75 after a downwardly revised 7-cent gain the previous month. For the 12 months that ended Feb. 28, wages increased 2.6 percent. That was down from 2.8 percent for the 12 months that ended Jan. 31.
The January year-over-year wage increase originally was reported as 2.9 percent, an uptick that fueled fears of higher inflation. Those concerns triggered a bout of financial market turmoil, as investors feared higher interest rates were coming to keep inflation in check.
Fed officials indicated in December that they would raise the central bank's benchmark short-term interest rate by a quarter-percentage point three times this year, to a range between 2 percent and 2.25 percent. The first increase is expected at the Fed's March 20-21 policymaking meeting.
After January's wage gains, analysts speculated the Fed might add a fourth rate increase this year. But the slowdown in wage growth last month makes that less likely, Hamrick said.
"To have the lack of more substantial wage gains at this point probably helps to alleviate some of the immediacy on the four-interest-rate-hikes-in-2018 question," he said.
Economists had said January's wage gains might have been a one-time jump, fueled by increases in the minimum wage that kicked in at the start of the year in several states, as well as raises spurred by the tax cuts enacted at the end of 2017.
The recovery from the recession has been plagued by tepid wage growth of about 2 percent a year. That has been expected to change as the unemployment rate falls and employers have to compete for new workers. But as February's large increase in the labor force showed, there are still Americans on the sidelines who can be lured back to a growing jobs market and keep wages from rising more quickly.
Kolko was more optimistic that wages nationally will grow, noting that the tighter labor market was putting pressure on employers to pay more.
"Workers should be encouraged the most about there being more job opportunities," he said. "The year-over-year wage number slowed down, but that's a volatile number."
Kolko noted that the percentage of prime-age Americans -- those age 25-54 -- with jobs jumped to 79.3 percent in February from 79.0 percent the previous month. The new figure was the highest since 2008 and means more people in their prime working years are getting jobs.
Information for this article was contributed by Christopher Rugaber of The Associated Press.
Business on 03/10/2018