Economy Adds a Whopping 678,000 Jobs in February, Blowing Past Expectations | Economy
The unemployment rate, meanwhile, dropped to 3.8%, not far off from the pre-pandemic record of 3.5%.
Economists had forecast an increase of 400,000.
Gains were widespread across industries from leisure and hospitality to health care and construction. It appears the economy shrugged off the effects of the omicron variant of the coronavirus.
The number of people not in the labor force looking for work fell to 5.4 million. In February 2020, it stood at a record 3.5%.
“With close to 11 million current job openings, staffing agencies report that demand for both flexible and permanent talent continues to increase across virtually all occupations,” says Richard Wahlquist, the president and CEO of the American Staffing Association. “The ASA Staffing Index hit another all-time high value in February, and we now expect that labor supply shortages will continue for all of 2022 and beyond. These shortages and record levels of employee resignations are headwinds that are impeding both company growth and overall economic growth.”
Indeed, there is evidence that is happening.
“Amid a shortage of workers and materials, the ISM services index fell 3.4 points to 56.5 in February as business activity slowed 4.8 points to 55.1,” Wells Fargo economists Tim Quinlan and Shannon Seery wrote on Thursday. “That is the slowest pace of expansion for business activity since the economy first emerged from pandemic-era lockdowns in May 2020.”
The robust labor market was one element of the economy that Federal Reserve Chairman Jerome Powell cited in testimony to Congress this week, adding that the central bank is poised to raise interest rates by 25 basis points at its meeting in mid-March. Analysts believe it will begin a wave of rate hikes throughout the year.
“The big fear for the Fed is that inflation is spreading out,” beyond goods and into the services sector, says Raymond James Chief Economist Scott Brown.
Hovering over all of this is the war in Ukraine, with Russia’s economy in dire shape and the price of oil topping $110 a barrel. That is adding to the spike in inflation, along with a job market that remains extraordinarily tight – especially for certain positions .
“There are 11.9m jobs open in our country today – with just four roles representing 14% of jobs posted in February: nurses, software / app developers, other IT tech roles and drivers,” says Becky Franckiewicz, president of Manpower Group. “IT and tech positions are in more demand than drivers and logistics workers for the first time since the beginning of the crisis. Ensuring people have the skills for the jobs that are set to rise post pandemic will be critical to ensuring everyone benefits from recovery.”