US hiring stays robust in February as unemployment ticks up

Traders see report as a pathway for Federal Reserve to impose smaller rate increases

US employers beat expectations again for February, adding 311,000 jobs. Reuters

Hiring in the US remained robust in February, but moderate wage gains and a slight rise in unemployment could pave the way for a smaller interest rate increase from the Federal Reserve when it meets later this month.

Employers added 311,000 jobs last month, data released by the Labour Department on Friday showed. While last month's hiring was a slowdown from January's mammoth report, it still beat Bloomberg's estimate of 225,000 job gains.

Meanwhile, unemployment rose slightly to 3.6 per cent, up from the 53-year-low of 3.4 per cent.

Average hourly earnings rose 0.2 per cent after January's gains of 0.3 per cent. Over the past 12 months, wages have increased 4.6 per cent, below estimates of 4.8 per cent.

"Our economy is moving in the right direction," President Joe Biden said in remarks from the White House.

He said he remains optimistic that inflation in the US will continue to cool, pointing to next week's Consumer Price Index report.

"Hopefully it will be in some solid shape," the President added.

Recent data indicates that the job market is especially tight in the US. A separate report from the Labour Department on Thursday showed there are currently 1.9 available positions for every jobseeker.

“Despite the job cuts that we have seen spread deep and fast across the tech sector, the US’s overall jobs market remains healthy,” said Srijan Katyal, global head of strategy and trading services at the brokerage ADSS.

Wall Street opened lower after the report's release. The Dow dropped 81 points. The S&P 500 and Nasdaq Composite fell 0.4 per cent and 0.62 per cent.

The Fed has attempted to slow down hiring — and with it, inflation — by bringing interest rates to the range of 4.5 per cent and 4.75 per cent, but Friday's release shows that the labour market has so far been unaffected by the central bank's actions.

Federal Reserve Chairman Jerome Powell this week said the central bank would strongly consider speeding up the rate of its interest-rate raises after a slew of economic data came in hotter than expected.

“This data will reinforce the Fed’s stance on keeping rates higher for longer, particularly off the back of the Fed’s Powell stating they’re now targeting a higher-than-expected peak rate,” Mr Katyal said.

Friday's report shifted expectations among traders, who are split on whether the Fed will raise interest rates by 25 or 50 basis points later this month, CME's FedWatch Tool shows.