Last month, America’s unemployment rate reached its highest level in two years, climbing to 3.9% from 3.7% in January, even as employers added 275,000 jobs, according to the Labor Department.
The monthly report, closely monitored for insights into the world’s largest economy, is seen as crucial amid rising borrowing costs since 2022.
While job creation exceeded expectations, the latest figures presented mixed signals. Analysts noted little cause for major concern or fears of economic harm from higher interest rates.
“Overall things still looking good,” commented Harvard professor Josh Furman, a former economic advisor to Barack Obama, on social media, though he acknowledged the slight shift in worry from inflation towards recession.
Hiring by healthcare firms, the government, and bars and restaurants drove job gains in February, with the rise surpassing many analysts’ forecasts. However, the Labor Department revised down job growth figures for January and December by about 167,000.
The increase in the unemployment rate was attributed to approximately 334,000 more people reporting being out of work. Nevertheless, the rate remained historically low, and more individuals entered the labor force.
Average hourly pay rose by 4.3% compared to the previous year, with a modest 0.1% increase over the month.
Against the backdrop of a presidential election year and ongoing debate within the US central bank on interest rate cuts, Federal Reserve Chairman Jerome Powell indicated the possibility of rate cuts later this year, reinforced by the latest report. However, the timing of such cuts remains uncertain.
Seema Shah, chief global strategist at Principal Asset Management, characterized the latest figures as “all over the place,” noting that while the broad jobs report was somewhat market-positive, caution was still warranted from the Federal Reserve.
