The great American job machine exercised its muscles in February, adding 678,000 jobs, well-exceeding projections, according to the Labor Department on Friday.
Furthermore, the jobless rate fell to 3.8 percent, close to the pre-pandemic low of 3.5 percent. Gains were seen in businesses ranging from leisure and hospitality to health care and construction. The economy appears to have weathered the effects of the coronavirus’s omicron version.
“Since I took office, the economy has created 7.4mn jobs. That’s 7.4mn jobs providing families with dignity and a little more breathing room. We are building a better America,” US president Joe Biden said in a statement after the numbers were released.
The number of people who are not in the labor force and are looking for jobs has decreased to 5.4 million. It reached a new high of 3.5 percent in February 2020. Staffing companies say that, with nearly 11 million current job opportunities, demand for both flexible and permanent labor is increasing across virtually all occupations.
The ASA Staffing Index reached a new all-time high in February, and we now anticipate that labor supply shortages will persist into 2022 and beyond. These shortages, along with unprecedented numbers of personnel resignations, are stifling both corporate and broader economic growth. There is evidence that this is happening.
The ISM services index declined 3.4 points to 56.5 in February, while business activity slowed 4.8 points to 55.1, according to Wells Fargo economists Tim Quinlan and Shannon Seery, who wrote on Thursday. This is the slowest rate of growth in business activity since the economy first emerged from pandemic-era lockdowns in May 2020.
In testimony to Congress this week, Federal Reserve Chairman Jerome Powell noted the solid labor market as one aspect of the economy, adding that the central bank is set to raise interest rates by 25 basis points at its meeting in mid-March. Analysts expect it will start a series of rate hikes later this year.
“The big fear for the Fed is that inflation is spreading out,” beyond goods and into the services sector, says Raymond James Chief Economist Scott Brown.
The war in Ukraine looms over all of this, with Russia’s economy in shambles and oil prices exceeding $110 per barrel. This is contributing to the rise in inflation, as does a job market that is extremely tight – particularly for specific occupations.
There are currently 11.9 million jobs available in our country, with only four roles accounting for 14 percent of all jobs advertised in February: nurses, software/app developers, other IT tech roles, and drivers. For the first time since the onset of the crisis, IT and tech jobs are in more demand than drivers and logistics workers.
Making sure individuals have the skills they need for the jobs that will be created as a result of the pandemic will be vital to ensuring that everyone benefits from the recovery. Short-term US Treasury yields fell marginally after the news, as traders bet that the flat average hourly earnings number would keep the Fed on pace for a quarter-point increase in interest rates later this month. US markets fell as investors focused on the Ukraine-Russia conflict.
“The jobs report was stellar, but the market is in the middle of this geopolitical flight-to-quality rally,” said Subadra Rajappa, head of US rates strategy at Société Générale. “If it weren’t for the geopolitical risk, you would have seen a much bigger reaction in the market.”
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