U.S. employers extended a streak of hiring in February by adding 295,000 jobs, the 12th straight monthly gain above 200,000. The unemployment rate fell to 5.5% from 5.7%, the government says in its monthly jobs report issued this morning.
But The Associated Press reports the rate declined mainly because some people out of work stopped looking for jobs and were no longer counted as unemployed.
February’s robust job gain wasn’t enough to boost wages by much. The average hourly wage rose just 3 cents to $24.78 an hour. Average hourly pay has now risen just 2% over the past 12 months, barely ahead of inflation.
Still, over that time, 3.3 million more Americans have gotten jobs. More jobs and lower gas prices have led many consumers to step up spending. That’s boosting the economy, offsetting sluggish economies overseas and giving employers the confidence to hire.
Today’s figures provide “more evidence that the labor market is recovering rapidly, with employment growth more than strong enough to keep the unemployment rate trending down,” says Jim O’Sullivan, chief U.S. economist at High Frequency Economics. Falling unemployment “makes more acceleration in wages increasingly likely.”
At 5.5%, the unemployment rate has now reached the top of the range the Federal Reserve has said is consistent with a healthy economy. That could make it more likely that the Fed will act soon to raise interest rates from record lows.
“This is quite a symbolic change that increases the pressure on the Fed to hike rates in June,” says Paul Dales, an economist at Capital Economics.
