Jobs Are Booming, but Tariffs Could Be Bad News


Hiring surged last month as US employers generated the most new jobs since mid-2016, the Labor Department said Friday, but wage growth slowed as long-awaited gains in worker pay have yet to take permanent hold.

Over the year, the state's seasonally adjusted unemployment rate decreased four-tenths of a percentage point from 3.9 percent in January of 2017.

If firms convert part-time workers to full-time workers or draw in more discouraged people not now looking for work, that broad measure of labor slack might fall further without pushing down conventional measures of unemployment.

Two weeks ago, the Federal Reserve estimated that "the labor market in early 2018 appears to be near or a little beyond full employment". The current nine-year economic expansion is the second-longest in the nation's history, and by midsummer would be the longest.

President Trump's policies and tax cuts are getting Americans back to work, creating growth, and restoring confidence in the US economy.

Manufacturing, meanwhile, maintained a course of steady growth in February, increasing by 31,000 jobs, with a lot of them sprouting in transportation equipment (8,000) and fabricated metal products (6,000). “In addition to a massive top-line number, construction employment surged by 61,000 net new jobs.

Manufacturing payrolls increased by 31,000 jobs, rising for a seventh straight month. Job growth has averaged 242,000 over the past three months, above 2017's monthly pace of 187,000.

"While the employment gains unequivocally suggest underlying strength in the economy, wage gains remain muted enough for the Fed to continue with an only gradual normalization of the policy stance".

The focus of this report was wage growth.

A broad measure of unemployment and underemployment that includes Americans stuck in part-time jobs or too discouraged to look for work held steady at 8.2%. Job openings in the construction industry remain at historic highs.

Medium-sized businesses (50 to 499 employees) saw the largest gains during the month, with 97,000 jobs, according to the report. Even mining firms, a job-losing industry in recent years, hired 9,000 workers.

"In spite of the modestly softer February figure, for the first two months of the quarter, the headline average hourly earnings number is increasing at a 3.3 percent annual rate, which would make it the strongest quarter of the expansion", said Michael Feroli, an economist at JPMorgan in NY.

Financial sector payrolls increased by 28,000 last month, the most since October 2005.

Economists have warned that industries that use steel and aluminum - from vehicle companies to craft breweries - could face significant job losses as a result of the tariffs. The company, based in Parkville, Missouri, just outside Kansas City, makes data analysis software that helps restaurants track costs and work schedules.

"That speaks directly to the growing demand for retail and the need for more retail services", she said. Still, the administration has opened the door to so many possible exemptions from the tariffs that an accurate estimate of the impact on jobs is all but impossible. "There are more IT jobs and not as many people".