275,000 jobs added in February, employers watching economy and new labor rules: CEI analysis

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The economy added 275,000 jobs in February, but the overall unemployment rate is higher than this time last year, sitting at 3.9 percent compared to 3.6 percent. Today’s report may help the Fed in fighting inflation, but new labor rules have caused hiring scares among employers.

CEI Senior Economist Ryan Young:

“Today’s strong employment numbers will make inflation-fighting a little easier. The Fed is now more likely to resist lowering interest rates at its next meeting on March 20. Inflation is not only still above target, but is slightly worse than the headline numbers say.

“If the economy slows down, markets seem to think that the Fed and the political branches will go back into stimulus mode, which means more inflation. Keeping interest rates high is a way to tame those inflation expectations, especially in an election year.

“A strong labor market also means that a slowdown is still a ways off—especially since there are still 1.45 job openings for every unemployed person, and real wages are still going up.”

CEI Research Fellow Sean Higgins:

“The big news with Friday’s jobs report is that the jobs market was cooler than previously thought as employers have gotten choosier with who they hire. The Labor Department’s report revised downward the numbers for January and December, revealing that 174,000 in reported jobs gains were in fact illusory. February’s gains of 275,000 jobs are in line with December’s revised figure of 290,000 and January’s 229,000. The overall unemployment rate of 3.9 percent is up from 3.6 percent a year ago. Employers have become cautious and aren’t putting as much effort into attracting workers. Average wages edged up by 5 cents an hour in February, a steep decline from January’s 18 cent increase. The rising cost of labor, combined with increased union activity and the Labor Department’s new rule meant to address so-called worker misclassification have all caused businesses to pull back on hiring.”