The headline news in the Labor Department’s February employment report — 235,000 new jobs and a 4.7 percent unemployment rate — cheered economy watchers, but it was not the only positive trend to be found among the fresh figures.
The government also said average hourly earnings climbed 6 cents, or 0.2 percent, to $26.09, after a 5-cent increase in January. Year over year, earnings have risen by 71 cents, or 2.8 percent.
Additionally, Bloomberg reported, the share of prime-age Americans (ages 25 to 54) in the labor force was the highest since 2011. The prime-age participation rate rose to 81.7 percent in February.
The government said the overall participation rate was 63 percent (up for the third month in a row) and the employment-population ratio was 60 percent, which was the highest since February of 2009 during the Great Recession. Job gains in February occurred in construction, private educational services, manufacturing, health care and mining.
The increase in construction jobs was the strongest in nearly a decade.
“If you dig a bit deeper, there are three strong reasons for optimism: in the weather-adjusted data, in the wage growth and in the unemployment and participation rate,” Gregory Daco, head of U.S. macroeconomics at Oxford Economics in New York, told Bloomberg.
So the economy is off to a good start under the new Trump administration and surveys have shown that businesses and consumers are, as a whole, more confident, although the public’s expectations for the economy diverge widely between Republicans, who support Trump, and Democrats, who oppose his ideas and plans.
Michael Gapen, chief U.S. economist at Barclays Plc in New York, told Bloomberg that only government policy changes will promote the kind of business investment that creates large numbers of jobs.
“Yes, the sentiment has improved and equity valuations have risen, financial conditions have eased,” Gapen said. “The longer that stays around, yes, you’d expect it to matriculate into some hard data, including labor market data. But at some point, you have to have the policies — otherwise that sentiment will reverse.”
While the business community and the financial markets await the details of Trump’s economic plan, which the president has said will include sharp tax cuts and a sizable increase in infrastructure spending, the Federal Reserve’s policy-making committee figures to wait no longer. The panel is expected to approve an increase in interest rates when it meets today and Wednesday.
Fed chairman Janet Yellen signaled in a March 3 speech to the Executives Club of Chicago that the central bank probably will raise the federal funds rate by a quarter-point, to a range of 0.75 percent to 1 percent.
"The [jobs] report seals the deal for a rate hike. … The labor market is where the Fed wants it to be," Gus Faucher, deputy chief economist at PNC Financial in Pittsburgh, told Reuters.
A rate increase this week would be only the third since 2009 — a sign of how deeply the recession slowed the economy — but analysts now believe the pace of increases will quicken.
"We continue to expect the Fed to raise its policy rate by an above-consensus four times this year," Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, told Reuters.
By Wednesday afternoon, when Yellen will hold a press conference to explain the Fed’s rate decision, economy watchers will have significant new data about the health of the economy.
On Wednesday morning the Commerce Department will issue its retail sales report for February (the consensus forecast is for an increase of just 0.1 percent after an 0.4 percent gain the previous month) and the Labor Department will release its report on the Consumer Price Index for February.
The consensus forecast is that the CPI rose 0.1 percent for the month (after an 0.6 percent increase in January) and that core CPI, which excludes volatile food and energy prices, rose 0.2 percent after an 0.3 percent increase in January.
On Thursday we will see the Commerce Department’s report on housing starts and building permits for February, and on Friday the University of Michigan will release its preliminary Consumer Sentiment Index for March. The expectation is that the index rose a point to 97.3 from February.
The wage gain the Labor Department noted in its jobs report figures to be a factor if the mood among consumers is shown to further improve, and increases in consumer spending may not be far behind as spring home improvement and clothing purchases become a priority.
The report of rising pay “is saying that workers are beginning to share the gains in the economy,” Edward Leamer, professor of management, economics and statistics at UCLA, told the Los Angeles Times. “We’re starting to see workers have some market power.”