Feb jobless rate down at 5.5%, lowest in 7 years

Washington

EMPLOYERS added more jobs than forecast in February and the unemployment rate dropped to 5.5 per cent, the lowest in almost seven years, showing the labour market is sustaining progress after the best performance since 1999.

The 295,000 advance in payrolls last month followed a 239,000 January increase that was smaller than previously reported, figures from the Labor Department showed on Friday.

The median forecast in a Bloomberg survey of economists called for a 235,000 increase. The unemployment rate fell from 5.7 per cent, while hourly earnings rose less than forecast.

The report underscores a lingering appetite among companies to boost headcounts as increased purchasing power from cheaper fuel supports consumer spending. While the jobless rate reached Federal Reserve policymakers' range for what they consider full employment, a missing link continues to be faster wage growth that will be needed to ensure household purchases accelerate.

"These were solid job gains," said Brian Jones, a senior US economist at Societe Generale in New York, whose forecast for a 280,000 gain was among the closest in the Bloomberg survey. "You've got a very strong economy."

Stock-index futures declined on concern that the drop in unemployment would mean the Fed is more likely to raise interest rates around mid-year.

Estimates in the Bloomberg survey ranged from 150,000 to 370,000. The jobless rate was projected to drop to 5.6 per cent from January's 5.7 per cent.

In another positive indicator that the US economy was strengthening, the country's trade deficit fell to US$41.8 billion in January from December as imports declined more than exports, the Commerce Department said on Friday. The trade gap narrowed from a revised December reading of US$45.6 billion, previously estimated at US$46.6 billion. The January number was slightly less than analysts expected.

February marked the 12th straight month payrolls have increased by at least 200,000, the best run since a 19-month stretch that ended in March 1995. Payrolls rose 3.1 million in 2014, the most in 15 years.

Average hourly earnings rose 0.1 per cent from the prior month after rising 0.5 per cent in January, which was the most since November 2008. The median forecast called for a 0.2 per cent gain. Earnings were up 2 per cent over the past year, also less than projected.

The revision to the January figures subtracted 18,000 jobs from the payroll count. December was unrevised at 329,000. To calculate the data, the Labor Department surveys businesses and households for the pay period that includes the 12th of the month. The gain in February employment was led by stronger hiring in business services and leisure and hospitality, which include restaurants.

The drop in the jobless rate reflected both an increase in hiring and a decline in the number of people in the labour force. The participation rate, which indicates the share of working-age people working or looking for a job, decreased to 62.8 per cent from 62.9 per cent in January.

Overall, inflation also has remained subdued, with a plunge in energy costs, combined with sluggish global growth, weighing on prices. Bloomberg, AFP