The creation of 275,000 new jobs in the United States in February, announced last week by the Labor Department, indicated that the labor market expansion remains vigorous. At that pace, in February the three-month average of job creation increased to 265,000 during more than three years of sustained increases and despite the highest interest rates in twenty years, approved by the central bank to control inflation.
But looking closely, the February figures also revealed high interest rates are slowing down the labor market, because the unemployment rate increased to 3.9 percent, the highest in two years, after 3.7 percent in January. Also in February, average hourly earnings increased slightly by 0.1 percent, from a revised figure of 0.5 percent in January. However, it is remarkable that amid the vigorous post-pandemic expansion, the salaries of low-income workers have increased more than those of college educated professionals, who have been subject to layoffs mainly among high technology companies.
The evidence of a slowdown in the labor market turned the attention toward the central bank particularly in Wall Street, wondering if it could signal the start of interest rate reductions. The answer will be known next week, on March 20, at the end of the next meeting in Washington of the central bank’s Open Market Committee.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO, and other media.
