U.S. labour market: significant early-year leap in employment, still only moderate wage pressure

On account of a pleasing development on the labour market which has seen a significant number of jobs created in the manufacturing sector, the substantial momentum in employment figures recorded in the previous month was maintained in February as well. According to an official report published today on the U.S. labour market, the number of people in employment excluding agriculture grew by 235,000, very nearly repeating the figures registered in the previous month. The decline in the rate of unemployment from 4.8% to 4.7% highlights the fact that the U.S. labour market is in exceptionally fine fettle without needing any economic stimuli. As the available workforce increased again substantially in February compared to the previous month, it was also possible for some workers returning from the “hidden reserves” to be reintegrated into the labour market. With momentum on the labour market not faltering in February (in actual fact it increased slightly in the manufacturing and construction sectors) unemployment fell despite the large influx of available workers. However, this significant expansion in the workforce is likely to have curtailed the rising momentum in wages. As in January, the average hourly wage rose by just 0.2% month-on-month. Nevertheless, the current labour market figures certainly justify the fact that the central bank is continuing its gradual increase cycle this month. Since the beginning of last year, the unemployment rate has been just under the 5% mark and a further wait-and-see approach would only serve to increase the risk of an abrupt increase in wages.

We expected the number of jobs in the manufacturing industry to rise. However, the fact that this development has been more pronounced than expected cannot be solely attributed to mild winter weather, from which the construction industry has benefitted. The rise of 28,000 employed workers in the manufacturing sector was not only the largest rise in 13 months, but was also the third consecutive increase. A similar picture emerged from the mining and oil industries. The development in the manufacturing sectors reflected the improved order situation and the stable, recovered oil price.

The overall positive economic climate in the USA indicates that the employment dynamic should continue to be robust in the coming months, again likely to be borne by the service sector. Even taking into account the fact that sentiment surrounding the industry has surprisingly improved significantly over the past few months, job creation in this sector should certainly continue, although we do not expect another marked rise in the industry’s employment dynamic.

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