The economy again beat expectations in February and added 275,000 jobs, the Bureau of Labor Statistics reported Friday, a sign the labor market is retaining momentum early in the year.
The unemployment rate rose two tenths of a percentage point to 3.9%. Notably, the unemployment rate remains low by historical standards.
The job growth is boost for the White House, which has been working to credit President Joe Biden for the strong job creation over the past year, characterizing the underlying strength of the labor market and broader economy as “Bidenomics” in action.
“The report was basically more of the same, which is a good thing,” said Robert Frick, corporate economist with Navy Federal Credit Union. “A high number of jobs were added in areas where they are most needed, including education and health care. Still, job gains are becoming more broad based, which we should expect as the labor market normalizes and probably glides to a sustainable path of about 150,000 jobs added monthly.”
Job growth was seen in health care, in government, at restaurants and bars, in social assistance, and in transportation and warehousing.
Still, there were unfavorable details in the report, beyond the rise in the unemployment rate. Most notably, the past few months’ job gains were significantly revised down. Cumulatively, the bureau said Friday, there were 167,000 less jobs added in January and December than previously reported.
In February, the labor force participation rate was at 62.5% for the third consecutive month, and the employment-population ratio was little changed at 60.1%. Those metrics have held steady over the past year.
Job gains have been much larger than expected to end 2023 and begin 2024, given the headwinds imposed by the Fed’s aggressive tightening cycle in response to the inflation that has roiled households over the past few years. Since the central bank began hiking in March 2022, annual inflation, as tracked by the consumer price index, has fallen from a peak of about 9% in June 2022 to just 3.1% in January.
The Federal Reserve held its first meeting of 2024 in January and opted to hold its interest rate target steady at 5.25% to 5.50%.
The continued strength of the labor market, combined with reports that inflation was hotter than expected in January, have led investors to push back expectations for when the Fed will start cutting rates. It now appears likely that will happen in May, June, or later.
The Fed predicts the unemployment rate will rise to 4.1% by the end of this year. Officials also predict very modest 1.4% GDP growth in 2024.
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GDP grew at a 3.2% annual rate in the fourth quarter of 2023, adjusted for inflation, bringing growth for the year to 2.5% in 2023.