U.S. job growth seen
strong in February; wages to rebound
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[March 10, 2017]
By Lucia Mutikani
WASHINGTON
(Reuters) - U.S. employers likely maintained a brisk pace of hiring in
February and boosted wages for workers, which is expected to give the
Federal Reserve the green light to raise interest rates next week
despite slowing economic growth.
Nonfarm payrolls probably increased by 190,000 jobs last month,
according to a Reuters survey of economists, in part as unseasonably
mild weather buoyed employment in the construction sector. The economy
created 227,000 jobs in January.
The Labor Department will publish its closely watched employment report
on Friday at 08:30 a.m. (1330 GMT). Fed Chair Janet Yellen signaled last
week that the U.S. central bank would likely hike interest rates at its
March 14-15 policy meeting.
The economy needs to create roughly 100,000 jobs per month to keep up
with growth in the working-age population.
"February employment appears to be the final hurdle for the Fed to raise
interest rates in March, and it's likely to be easily jumped," said Ryan
Sweet, senior economist at Moody’s Analytics in Westchester,
Pennsylvania.
Payrolls could, however, surprise on the upside after the ADP National
Employment Report showed on Wednesday that private sector employers
hired 298,000 workers in February, the largest amount in a year.
![](http://archives.lincolndailynews.com/2017/Mar/10/images/ads/current/graue_preowned_020617.png)
Last month's brisk clip of hiring is expected to have been accompanied
by an acceleration in wage growth, with average hourly earnings seen
rising 0.3 percent in February after January's paltry 0.1 percent gain.
That would lift the year-on-year increase in wages to 2.8 percent from
2.5 percent in January.
The unemployment rate is seen declining 1/10th of a percentage point to
4.7 percent in February, even as more people likely entered the labor
market, encouraged by the hiring spree.
With the labor market near full employment, wage growth could speed up
as companies are forced to raise compensation to retain employees and
attract skilled workers.
According to economists, a growth rate of between 3 and 3.5 percent in
wages is needed to lift inflation to the Fed's 2 percent target. But
inflation is already firming, in part as commodity prices rise.
BEHIND THE CURVE
Rising inflation, together with a tighter labor, stock market boom and
strengthening global economy, has left some economists expecting that
the Fed could increase interest rates much faster than is currently
anticipated by financial markets.
"The Fed might find itself behind the curve and having to catch up,"
said Joel Naroff, chief economist at Naroff Economic Advisors in
Holland, Pennsylvania.
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![](../images/031017pics/busine57.jpg)
People wait in line to enter the Nassau County Mega Job Fair at
Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S.
October 7, 2014. REUTERS/Shannon Stapleton/File Photo
![](http://archives.lincolndailynews.com/2017/Mar/10/images/ads/current/Carroll_catholic_lda_EDUCATION_2017.png)
The U.S. central bank lifted its benchmark overnight rate in December
and has forecast three rate increases for 2017.
Job growth has averaged 186,000 per month since January 2010, a recovery
that predates Donald Trump's presidency. While Trump's election victory
last November sparked a stock market rally and jumps in consumer and
business confidence, there has been no surge in both business and
consumer spending.
Data ranging from trade to consumer and business spending suggest the
economy slowed further early in the first quarter after growing at a 1.9
percent annualized rate in the final three months of 2016. The Atlanta
Fed is forecasting gross domestic product growing at a 1.2 percent rate
this quarter.
"It's really surprising that the U.S. is still producing this many jobs
because we are quite close to full employment," said Thomas Costerg, a
senior U.S. economist at Standard Chartered Bank in New York. "It's way
too early to see the impact of the new administration's policies."
All sectors of the economy, with the exception of government, are
expected to have expanded payrolls in February.
Manufacturing jobs are forecast to have increased for a third straight
month as rising oil prices fan demand for machinery. Warm weather last
month likely kept crews at construction sites, boosting payrolls in the
sector.
Retail sector employment probably cooled after surprisingly adding
45,900 jobs in January. Retailers, including J.C. Penney Co Inc and
Macy's Inc have announced thousands of layoffs as they shift toward
online sales and scale back on brick-and-mortar operations.
Government employment could fall for a fifth straight month amid a
freeze on the hiring of civilian federal government workers, which came
into effect in January.
![](http://archives.lincolndailynews.com/2017/Mar/10/images/ads/current/more_news_bch_121715.png)
"We think that overall government payrolls will decline 10,000," said
Daniel Silver, an economist at JPMorgan in New York.
(Reporting by Lucia Mutikani; Editing by Leslie Adler)
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