The Economy Is Looking Awfully Strong


On top of the exceptionally strong February, the job gains in December and January were revised up by a combined 54,000, bringing average monthly job creation to a strong 242,000 a month for the latest three months.

The economy added 175,000 jobs in December and 239,000 in January.

Hourly wages gained 0.2 percent in the month, matching analyst expectations but putting compensation up 2.6 percent over the same month past year - ahead of consumer inflation of 2.1 percent.

David Donabedian, chief investment officer of CIBC Atlantic Trust: "Over the last 2 months, the job market has absorbed 1.3 million new entrants into the labor force, allowing the unemployment rate to stay at 4.1% - a remarkable testament to the underlying strength in this economy".

There are 39 pages in the Labor Department's February report on the employment situation in the United States, but they can be summed up in four words: The economy is humming.

Average hourly earnings in February were up 4 cents (to $26.75) following a 7-cent gain the month before. January's wage gain, originally reported as a 2.9% rise, was revised down to 2.8%.

The tightening labor market is expected to spur faster wage growth this year and help to lift inflation toward the Fed's 2 percent target. That indicated that more people were coming off the labor-market sidelines to look for work.

But the share of Americans who are either working or looking for jobs last month fell to a dismal 62.7 percent - a steep drop from 66.2 percent in February 2008.

Employment gains were led by the construction sector, which added 61,000 jobs, the most since March 2007. In the first two months of 2018, the economy has added an average of 276,000 jobs a month, a big step up from 182,000 on average in 2017.

The labor market is benefiting from strong domestic demand, an improvement in global growth as well as robust USA business sentiment following the Trump administration's $1.5 trillion income tax cut package that come into effect in January.

Industry employment for the most part has increased steadily the last year-and-a-half, thanks in large part to the uptick in drilling activity in hot shale plays like the Permian. Hiring at construction sites was likely boosted by unseasonably mild temperatures in February. Service providers added 187,000 workers, including about 50,000 in retail, a sector that has been under pressure. Hiring also picked up at retailers, manufacturers and local governments, including schools.