Warm weather and rising business optimism helped the U.S. economy to create another burst of job growth last month, giving President Donald Trump an early confidence boost and all but assuring that the Federal Reserve will nudge up interest rates next week.
Employers added 235,000 jobs in February, about as many as in January and well above analysts’ expectations and the average monthly payroll growth for all of last year, the Labor Department said Friday.
The unemployment rate dipped back down to 4.7 percent, just a notch above its decade low. The labor force expanded as more people were pulled into the job market. And there were fresh indications that worker earnings are increasing at a slightly faster clip than a year ago. Just about the only sour note last month were job losses in retail trade.
“The strength of the labor market is for real,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. “From a financial point of view, it’s a great state of affairs. We’re creating more jobs, we’re expanding, and it isn’t being coupled with inflation.”
Friday’s report was the first major employment gauge capturing an entire month with Trump as president, and administration officials were so eager to link the unexpectedly strong showing to Trump that White House Press Secretary Sean Spicer broke an obscure federal rule by publicly touting the news within the first hour of the report’s release.
Within two hours of Spicer’s tweet, Tom Perez, former President Obama’s Labor secretary and new chairman of the Democratic National Committee, followed with a statement of his own: “Thanks, Obama! Trump has had about as much to do with job growth since January 20th as he does with the Washington Wizards’ winning record: absolutely nothing.”
During the presidential campaign, Trump often had dismissed government data on employment as inaccurate and politically manipulated. When a reporter asked Friday whether Trump stood by his remarks that the data were “phony,” Spicer had a ready answer — and used words that he said were the president’s.
“They may have been phony in the past, but it’s very real now,” Spicer said.
Trump inherited a solid job market that has long outperformed the slow-growing economy. Even so, surveys show companies in manufacturing and other industries, including small firms, have become more confident about the outlook since late last year, at least in part because of hopes that tax cuts and other favorable policies will be coming from the new Trump administration and his party that controls Congress. Analysts say that optimism played some role in the robust hiring.
So likely did the unseasonably mild winter. While California was getting drenched last month, much of the rest of the country was coasting through this winter without major weather disruptions. Labor Department statisticians adjust employment data for seasonality, so theoretically weather variances should have been factored out, but in practice, extreme conditions can still distort the final numbers.
That’s probably what happened with the construction figures. Residential and commercial construction employers combined added a whopping 58,000 jobs last month, bringing the industry’s net payroll growth in the first two months to 98,000 — compared to 155,000 for all of last year.
But that also means that February’s job gains probably overstate the underlying strength of the labor market, and there could be payback in the coming months with somewhat slower hiring in the spring.
“This is not a sustainable pace, for sure,” said Sophia Koropeckyj, a labor economist at Moody’s Analytics in West Chester, Pa. She added that Moody’s was projecting job growth this year to average about 180,000 a month.
Even at that pace, the American job market would be doing remarkably well given that the economic recovery from the Great Recession is nearing its eight birthday in July. The nation has generated 77 straight months of job gains totaling more than 15 million. And the unemployment rate has been below 5 percent for 10 straight months, in a range that some economists see as full employment.