Employers Add 313K Positions as Job Growth Explodes in February

Job gains exploded last month, as the domestic labor market generated 313,000 jobs for its single best month since mid-2016, according to a report published Friday by the Bureau of Labor Statistics.

Goods producers were a key contributor to February's gains, as construction jobs swelled by 61,000 positions for their best month since early 2007. Manufacturing outfits, meanwhile, added 31,000 workers – exceeding January's 25,000 addition benchmark.

On the service providing end of the spectrum, retailers enjoyed a solid month's performance amid considerable upheaval in the brick-and-mortar industry, adding more than 50,000 new positions for retail's best month since 2016. Financial services jobs, meanwhile, expanded by 28,000 after two straight months of just 8,000-position upticks.

"Today's employment report for February was quite robust and it again goes to show just how strong the labor market is," Steve Rick, chief economist at CUNA Mutual Group, said in a statement Friday. "It likely seals the deal for a rate hike by the [Federal Reserve] later this month, and certainly raises the chances that we'll see four hikes in 2018."

The unemployment rate, meanwhile, held steady at 4.1 percent for the fifth consecutive month. Conditions improved for adult men, whose unemployment rate fell to 3.7 percent. But prospects slightly worsened for adult women and teenagers, whose rates rose to 3.8 percent and 14.4 percent, respectively.

The black unemployment rate fell considerably to 6.9 percent, while the Asian and Hispanic rates ticked down slightly to 2.9 percent and 4.9 percent, respectively. Unemployment for white Americans ticked up to 3.7 percent.

"Each time the unemployment rate gets low enough that it seems we can't possibly continue to add 200,000 jobs per month, we're reminded of the relative health of the economy as there continues to be upward trajectory in job growth," Rick said. "Too many months of this level of job growth, however, can be too much of a good thing, especially when it starts to really drive wage growth in a way that leads to fears of inflation and overheating of the economy."

Wage pressures don't appear to have exploded just yet, as average hourly earnings clocked in at $26.75 in February, up a respectable 2.6 percent over the year. But fears have surfaced that the economy is in danger of getting out ahead of itself as fiscal stimulus from the GOP's recent tax overhaul adds to a labor market that was already standing on relatively solid footing.

"That is the risk here. The economy is at risk of overheating," Mark Zandi, chief economist at Moody's Analytics, told reporters during a conference call earlier in the week.

Zandi was optimistic about the near future, however, suggesting that job growth should "remain strong" and that the unemployment rate is likely to creep into "the low 3s" by spring or summer of 2019 – an event he describes as "very rare."

Encouragingly, more Americans also appear to be getting off of the sidelines and at least trying to look for a job. The labor force participation rate, which measures the number of Americans either employed or actively looking for a job, climbed to 63 percent – its highest level since September.

The influx of new workers trying to find jobs likely prevented the national unemployment rate from falling further, as folks who aren't actively looking for a new position aren't technically counted as unemployed by the government. But such a trend is undoubtedly good news for the labor market.

"What held the unemployment rate up wasn't a lack of job creation, but a meaningful increase in labor force participation from formerly sidelined workers re-entering the workforce," Jim Baird, a partner and chief investment officer at Plante Moran Financial Advisors, wrote in a research note Friday. "The bottom line is that the labor economy remains very strong, and increasingly tight labor market conditions are now helping to boost the size of the labor force. That may constrain wage gains to a degree, but the mismatch between the skills employers need and the skills that applicants have will likely keep the pressure on to retain talent through competitive wages and benefits."