US jobless rate hits highest in two years

The US also recorded solid hiring in an “all over the place” Labor Department report.
US jobless rate hits highest in two years
A man makes deserts at a store at Chelsea Market in Manhattan on February 02, 2024 in New York City.Getty Images

America’s unemployment rate crept up to the highest rate in two years last month, despite more jobs being created than expected.

The jobless rate rose to 3.9%, up from 3.7% in January, even as employers added 275,000 jobs, the Labor Department said.

Its monthly report is being closely watched for clues into how the world’s largest economy is absorbing the jump in borrowing costs since 2022.

The latest numbers sent mixed signals.

Overall, analysts said there was little in the report to fuel major worries or raise fears that the economy would be harmed by higher interest rates.

“Overall things still looking good,” said Harvard professor Josh Furman, a former economic advisor to Barack Obama, on social media, while adding that the latest figures tilted the “balance of worry ever so slightly away from inflation and towards recession”.

Official figures showed hiring by health care firms, the government and bars and restaurant drove the job gains in February.

Though the rise was bigger than many analysts had forecast, the Labor Department also said job growth in January and December was about 167,000 lower than previously estimated.

The jump in the unemployment rate was due to an estimated 334,000 more people reporting being out of work, however, the rate remained low by historic standards and more people also entered the labour force.

Average hourly pay was up 4.3% in February, compared with a year earlier, rising a modest 0.1% over the month.

The report comes amid a presidential election year and as the US central bank is debating whether and when to start to cut interest rates.

The Federal Reserve has raised rates sharply since 2022 in response to soaring price inflation, hoping to slow the economy a bit and reduce the demand pressures that were pushing up prices.

So far, it has managed to avoid the harsh downturn that some analysts feared the rise in borrowing costs might trigger.

Federal Reserve chairman Jerome Powell has said the bank expects to start cutting rates later this year – a likelihood many have said has been reinforced by the latest report, even if the timing of the cuts remains up for debate.

Seema Shah, chief global strategist at Principal Asset Management, said the latest figures were “all over the place”.

“Taking a big step back, the broad jobs report is somewhat market positive,” she said. “The [Federal Reserve] does, however, still need to tread cautiously.”

Source: bbc.co.uk

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