Job growth jumped in February; wages take unexpected hit
Job growth accelerated more than forecast in February, but wages took an unanticipated hit.
"If you just look at the top line, it's a very nice report, but if you look at the details, it was an okay jobs report," said JJ Kinahan, chief strategist at TD Ameritrade. "The reason hourly wages are down is because there is a direct correlation to where jobs were created."
Health care accounted for the most employment gains, followed by retail and then by restaurant and service-type jobs. "What we didn't see was business services. We're creating jobs, and we'd like to create careers," said the strategist.
Employers added 242,000 jobs last month, while the nation's unemployment rate stayed flat at 4.9 percent, the U.S. Department of Labor said Friday. February's gain follows an upwardly revised 172,000 increase in payrolls in January, from an initial estimate of 151,000.
"It's a strong report, especially in the jobs number, which was much higher than expected, and we also saw continuing improvement in labor force participation," said Paul Christopher, a global strategist at Wells Fargo Investment Institute. "The only important blemish was wages."
Although job growth picked up speed last month, average hourly earnings -- another key labor market gauge -- declined 0.1 percent from January. That's the first monthly drop in more than a year. Wage growth has held just above 2 percent since the expansion started in the middle of 2009.
"If this very slow improvement in wages doesn't improve, that might temper" interest rate hikes by the Federal Reserve, said Christopher, who believes the central bank will likely raise its benchmark rate only once in late 2016.
The Fed hiked its overnight rate in December, its first such move in almost 10 years.
"While the headline numbers in the report are important, many Americans are most eager for better pay gains. On that front, the February data represents a setback," wrote Mark Hamrick, senior economic analyst at Bankrate.com, in a note. "Some slack remains in the job market."
Economists are watching the unemployment numbers for signs that the weakness that gripped the U.S. economy in the final three months of 2015 is persisting this year.
"We don't expect payrolls to keep rising at anything like this pace, but the underlying momentum here is strong," said Ian Shepherdson, chief economist with Pantheon Macroeconomics, in a note.
Global growth is slowing, led by China's downturn and diminishing demand for commodities. Some forecasters warn that the slowing abroad could hurt the U.S., although most economists expect moderate domestic economic growth in 2016.
U.S. economic data have been mixed in recent months. Although the pace of job-creation has remained solid and workers' wages are growing more quickly, a strong dollar and slumping demand abroad has hurt manufacturers and companies that operate globally.
America's gross domestic product -- the total value of goods and services -- fell to an anemic 1 percent between October and December, although economists expect growth to rebound in the current quarter.