The US economy added 275,000 jobs in February 2024, exceeding analysts’ predictions and signalling a robust labor market amid high interest rates, while the unemployment rate edged up to 3.9%.
In February 2024, the US economy added 275,000 jobs, surpassing analysts’ estimations of 200,000 and indicating a robust labor market despite challenges such as high interest rates. This growth was observed across various sectors, including healthcare, government, and food services. However, the unemployment rate saw a slight increase to 3.9%.
The labor market displayed signs of cooling with a decrease in job openings and worker resignations in January, even as private sector payrolls rose by 140,000. Nela Richardson, chief economist at ADP, commented that wage gains are still outpacing inflation, suggesting a dynamic market condition.
Federal Reserve Chair Jerome Powell signaled the likelihood of maintaining steady interest rates till at least summer 2024, aiming to achieve more stabilized inflation. President Joe Biden lauded the strong economic performance, emphasizing the nation’s resilience amidst various adversities.
Amid growing optimism, revisions of job numbers from previous months showed a significant reduction, with January’s figures adjusted from 353,000 to 229,000, and December’s by 43,000 jobs. These adjustments led to speculation about a potential interest rate cut in June 2024, as bond yields fell and stocks slightly increased in response. The market has fully priced in a quarter-point rate cut for June, amid lower job growth and a moderate rise in wages, which may alleviate inflation concerns.
Officials, including Powell, hinted at upcoming rate cuts, conditioned upon achieving the Federal Reserve’s inflation target. Despite the anticipation of rate reductions, some experts argue that the Fed might delay its actions, with a prediction of three rate cuts spread throughout the year.
The sustained job growth in February, along with a less-than-expected increase in average hourly wages, could assist the Federal Reserve in its ongoing battle against inflation. The resilience of the US job market, bolstered by immigration and sustained hiring, continues to support economic growth, with wage inflation being closely watched to ensure it does not counteract efforts to stabilize the overall economy.
