WASHINGTON — A second straight month of robust hiring pointed to a U.S. economy healthy enough for the Federal Reserve to raise interest rates next week and to signal the likelihood of further rate hikes ahead.
U.S. employers added 235,000 jobs in February, average paychecks rose and the unemployment rate dipped to a low 4.7 percent from 4.8 percent, the Labor Department said Friday.
February’s jobs report was the first to cover a full month under President Trump. During the presidential campaign, Trump had cast doubt on the validity of the government’s jobs data, calling the unemployment rate a “hoax.”
But just minutes after the report was released at 8:30 a.m. EST, Trump retweeted a news report touting the job growth.
Later in the day, his spokesman, Sean Spicer, quoted Trump as saying of the jobs reports: “They may have been phony in the past, but they are very real now,” a comment that incited laughter, including from Spicer himself, during a press briefing.
The February report showed that more people began looking for jobs, an encouraging sign that they’ve grown confident about their prospects. Hiring was strong enough to absorb those new job seekers as well as some of the previously unemployed.
“It’s hard to find much to dislike in the February jobs report,” said Michael Feroli, an economist at JPMorgan Chase.
About a quarter of the job gains occurred in construction, which added 58,000 jobs, the most in a decade. Unseasonably warm weather likely inflated that figure, economists said. Last month was the second-warmest February since 1895, according to the Commerce Department.
Some economists cautioned that last month’s outsized job gains might be hard to sustain. If warm weather did help elevate construction hiring in February, for example, it might also have the effect of subtracting from job growth that would normally occur in early spring.
“There will probably be some weather payback in March,” Ted Wieseman, an economist at Morgan Stanley, said in an email.
Mining, which includes oil and gas drilling, added 7,700 jobs last month, the most in nearly three years. Energy companies have increased drilling in response to higher oil prices, reversing nearly two years of job losses. Oil prices dropped this week, though.
And as unemployment declines, hiring typically slows as the pool of available workers shrinks.
Many small businesses are complaining that they cannot find workers with the qualifications they need. This trend could weigh on hiring in the coming months.
Stock prices fluctuated throughout the day Friday, and the Dow Jones industrial average closed up a modest 44 points.
The February jobs data likely provided the final piece of evidence the Fed needed to raise rates at its next policy meeting Wednesday, the third hike in 15 months.
The Fed’s inclination to tighten borrowing rates reflects how far the economy has come since the central bank cut its benchmark short-term rate to zero in 2008 and kept it there for seven years to support a fragile economy.
In December, Fed policymakers forecast that they would raise rates a total of three times this year. Those increases could lead eventually to higher loan rates for homes and cars as the economy further solidifies its gains. Economists said Friday’s hiring data increases the probability of further rate hikes.
“There are few factors more important to consumers than jobs,” said Russell Price, an economist at Ameriprise Financial. “Overall, consumers are in great shape to support an accelerated pace of economic growth.”
Average hourly pay rose 2.8 percent year over year in February, a decent gain though slightly below historical averages. In a healthy economy, wages typically rise at a roughly 3.5 percent annual pace.
Though most of the job market’s scars from the Great Recession have healed, some have still not. The number of part-time workers who would prefer a full-time job but can’t find one remains nearly 25 percent above its level before the Great Recession began in 2007.