The government of United States reported that, in February, 678,000 new jobs were created, with which unemployment fell to 3.8% and approached the pre-pandemic rate.
According to information shared by the Reuters chain, the employment increases reported by the Department of Labor were led by the 179,000 new positions taken in the leisure and hospitality sector, highly affected by the closures and restrictions due to the COVID-19 pandemic.
Economists surveyed had forecast a payroll increase of 400,000 jobs. Estimates ranged from 200,000 to 730,000 jobs. However, labor market conditions tightened further, with the unemployment rate falling to 3.8%, the lowest since February 2020, from 4% in January. That was despite more people entering the workforce.
Federal Reserve Chairman Jerome Powell this week described the labor market as “extremely tight,” telling lawmakers he would support a 25 basis point interest rate hike at the US central bank’s policy meeting on Monday. March 15 to 16.
He also stated that he would be “prepared to act more aggressively” if inflation does not decline as fast as expected. Economists expect up to seven interest rate hikes this year.
Meanwhile, oil prices have risen above $100 a barrel since Russia launched a war against Ukraine last week, invoking a barrage of sanctions against Moscow by the United States and its allies.
“There’s a lot of worrying news in the world right now, from the conflict between Russia and Ukraine to skyrocketing inflation,” said Sam Bullard, senior economist at Wells Fargo in Charlotte, North Carolina. “But the US jobs recovery remains a bright spot amid the carnage.”
After the January employment report and the good data on inflation, the financial markets have expected a rise of half a percentage point. The possibility of an interest rate hike has now been ruled out due to concerns about the fallout from the war between Russia and Ukraine.
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