February jobs rose a surprisingly strong 678,000, unemployment edged lower while wages were flat

The employment picture got closer to its pre-pandemic self as job growth accelerated in February.

The Bureau of Labor Statistics reported Friday that the unemployment rate was 3.8% for the month.

It was lower than estimates of 440,000 for payrolls and 3.9% for the unemployment rate.

Wages barely rose for the month, up just 1 cent an hour or 0.03%, compared to estimates for a 0.5% gain. The year-over-year increase was well below the estimate.

The report brought the level of employed Americans closer to pre-pandemic levels, but still short by over a million. The gap between the number of jobs that were open and the number of available workers was historically high at 1.7 vacancies per available worker.

Eric Merlis, managing director of global markets at Citizens Financial Group, said that the labor market recovery is very robust.

Markets did not react to the news because investors are focused on the Russia-Ukraine war. The government bond yield was lower at the start of the day.

Leisure and hospitality added 179,000 jobs for the month, making them the leading sector for job gains. The job gap for that sector was hit the hardest by government restrictions. The unemployment rate for the industry fell from January to February to 6.6%, a slide of 1.6 percentage points.

Other sectors showing strong gains included professional and business services, health care, construction, transportation and warehousing, and retail. Financial activities increased by 35,000.

The previous months had upward revisions. January moved up to 481,000 from the previous estimate of 481,000. The revisions added 92,000 more than before and brought the three-month average to 582,000.

The labor force participation rate moved higher to 62.3%, still 1.1 percentage points below the February 2020 pre-pandemic level. An alternative measure of unemployment that includes discouraged workers and those holding parttime jobs for economic reasons, and is sometimes referred to as the "real" unemployment rate, rose to 7.2%.

After a winter of omicron cases, the trend for jobs is upward, but little has changed in employment.

Nick Bunker, economic research director at Indeed, wrote that they can be optimistic about this year if we see more numbers like this moving forward. We can't take anything for granted in these uncertain times. Several key indicators of labor market health will hit pre-pandemic levels this summer if the recovery can keep up its current pace.

The economy has been wrestling with inflation pressures that are at their highest levels since the early 1980s. The Labor Department's main inflation gauge showed consumer prices rising at a 7.5% clip in January, a number that is expected to climb to close to 8% when February's report is released next week.

Companies continue to hire despite the fact that there are still gaps in the leisure and hospitality sector.

The jobs numbers are watched by the Federal Reserve. Monetary policymakers view the economy as near full employment, which adds pressure to prices that have soared due to supply shortages and demand surge related to the Pandemic.

Congress has pumped more than $5 trillion into the economy while the Fed has kept benchmark borrowing rates anchored near zero and injected nearly $5 trillion into the economy through asset purchases.

The Fed is expected to start raising interest rates this month, with market expectations that they will continue through the year.

The February jobs report will give the Fed greater confidence to push ahead with its planned policy tightening but, with wage growth now levelling off, there is less pressure for officials to front-load an aggressive series of rate hikes over the coming months.

According to the data, traders are fully price in a 25 basis point rate hike at the March Fed meeting and see a strong possibility of five more increases through the end of the year.

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