U.S. adds 678,000 jobs in February, adding momentum to economic recovery

WASHINGTON - The U.S. economy created a blockbuster 678,000 jobs in February, adding momentum to a robust recovery that is rapidly returning the labor market to its pre-pandemic boom.

As the omicron variant of the novel coronavirus receded, the unemployment rate fell to a new pandemic low of 3.8 percent last month, from 4 percent in January, the Labor Department said Friday. Average hourly wages for private-sector workers, meanwhile, held steady, climbing by a mere 1 cent. Annual wages have risen 5.1 percent, although they have not kept up with inflation.

The rosy picture caps off a string of 10 straight months of strong growth with the economy picking up a record 7 million jobs over the past year and setting the stage for a full recovery by this summer, a little more than two years after the pandemic plunged the country into recession.

“COVID is loosening its grip. The virus ruled through fear, and that fear is fading,” said Austan Goolsbee, an economics professor at the University of Chicago. “You see that around the country, as people are willing to go back out to jobs they weren’t willing to take in the midst of the pandemic.”

Job gains continued to be most pronounced in the service industries, such as hospitality, health care and construction, which have scrambled to hire enough workers to keep up with booming demand.

“We saw broad-based gains in every sector - in trucking, warehousing, construction, leisure and hospitality, even in nursing homes,” Labor Secretary Marty Walsh said. “Ninety percent of the jobs lost in March and April of 2020 have been recovered.”

Friday's jobs report was based on surveys conducted in mid-February before Russia's invasion of Ukraine and does not reflect the effect of the geopolitical crisis on the U.S. labor market. And although economists say it is unclear exactly how the war might affect American jobs, they note that skyrocketing energy prices, slowdowns in consumer spending or looming uncertainty could prompt businesses to pause hiring in the coming weeks.

For now, workers have been pouring back into the labor market. The unemployment rate, which counts only those who actively looked for work in the past month, is at its lowest level in two years. A broader measure of unemployment, which includes those who want jobs but are not actively seeking, dropped to 4.7 percent in February, nearing its pre-crisis rate of 4.3 percent.

"People are coming back to work," said Nick Bunker, an economist at the jobs site Indeed. "We've been seeing this trend since last fall, but it's become very stark recently, particularly among people of prime working age, between 25 and 54."

Indeed, the tight labor market - in which job openings continue to outnumber job seekers - has forced businesses to change their recruiting and hiring strategies. Employers of all kinds are fast-tracking their hiring processes and in some cases are promising on-the-spot offers to lock in candidates, particularly in retail and hospitality. The Home Depot, for example, which plans to hire 100,000 employees by spring, is touting an "accelerated hiring process" that could land candidates an offer within 24 hours of their applying.

But some economists say the tide may be turning. February's dramatic pickup in hiring, combined with stalling wage growth, could signal a shift in the labor market.

"One of the consequences of people returning to the labor force is that employers will be less desperate to find the workers they want," said Elise Gould, an economist at the Economic Policy Institute, a left-leaning think tank. "There could be a cost to wage growth in the near future."

For now, the strong jobs report raises pressure on the Federal Reserve to hike interest rates when it meets later this month and contributes to concerns that tight labor markets could be fueling inflation, which is already at a 40-year high. Fed Chair Jerome H. Powell told lawmakers on Capitol Hill this week that the central bank is planning to raise interest rates even though any fallout from the Russia-Ukraine war on the U.S. economy remains "highly uncertain."

"It is appropriate for us to move ahead," Powell said Wednesday. "Inflation is high, too high."