Jobs Report for February: What to Watch For

The Labor Department will release the latest hiring and unemployment figures at 8:30 a.m. Eastern time. The monthly report provides one of the better snapshots of the state of the American economy. Here’s what to watch for:

■ Wall Street analysts expect the data to show that 200,000 jobs were created in February, pretty much the same as January’s gain.

■ The unemployment rate is likely to remain 4.1 percent, where it has sat for four months, despite strong job growth. If it falls to 4.0 percent, it will be the lowest rate since 2000.

■ Average hourly earnings are expected to rise by 0.2 percent from January, which would slow the year-over-year increase to 2.8 percent from 2.9 percent last month, despite steady hiring.

After decades of steady decline, manufacturing jobs have bounced back somewhat over the last eight years. So look to see if their monthly gain is still a five-digit figure. With President Trump’s move to put tariffs on steel and aluminum imports and growing talk of a trade war, February’s numbers could establish a baseline to measure the impact of trade restrictions and retaliation over the coming months.

Other sectors where job growth is likely to be strong are health care and professional services. Moderate gains in retail jobs would suggest that prospects in this low-skill sector are not quite as dire as some analysts have thought.

This report is the last one before the Federal Reserve Board meets this month under its new chairman, Jerome H. Powell, and decides whether to increase the benchmark interest rate for the first time this year.

Job growth has been consistently strong. Before this latest report, the three-month average job growth equaled 192,000 a month. At the same time, the four-week average of initial jobless claims remains historically low, suggesting layoffs are down and employers are trying to hold on to their workers. Even one month of weak payroll gains, therefore, is unlikely to persuade the Fed to shift course and refrain from a rate increase.

A bigger question mark surrounds wage growth. The jump in January — which pushed the year-over-year figure to 2.9 percent last month from 2.3 percent just three months earlier — was credited with contributing to a sell-off in the stock market. “It’s a pretty positive backdrop for household income in stark contrast to last year, when wage growth was stagnant and income growth was slowing on a year-over-year basis,” said Ellen Zentner, chief United States economist at Morgan Stanley.

Announcements of bonuses like those that tumbled out of executive suites in — as opposed to pay raises — are not counted in the average hourly wage calculations by the Bureau of Labor Statistics. Though the consensus forecast is 2.8 percent, stronger wage growth could fuel inflation worries and set off speculation that the Fed is likely to raise rates four times this year, rather than three.

“While everyone is focused on tariff and trades, the real risk to the market is a bad inflation number,” said Jonathan Golub, chief United States equity strategist at Credit Suisse. A figure above 3 percent could lead investors to ratchet up their inflation worries and drive down stock prices.

Corporate executives have long complained about the difficulty of finding workers, particularly in sectors like construction and trucking. Economists have generally reacted with skepticism, arguing that if there were really a shortage of qualified workers, companies would be raising pay to compete for talent. Now there are signs that could at last be happening.

“For years and years, the trucking companies said they couldn’t find drivers, but they wouldn’t raise wages,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “Well, now they are.”

Competition for drivers has become fierce. Ms. Swonk said she had heard reports of trucking companies paying drivers six-figure salaries, plus $20,000 signing bonuses to lure them from competitors. Companies are also offering to train new drivers — even though many end up being poached by other companies. “They’re still losing them to other places,” Ms. Swonk said.

As for the construction industry, Jed Kolko, chief economist at Indeed, an online recruiting site, noticed a significant increase in job postings over the past week without a corresponding response from applicants. “It’s a good example of where demand on the employer side is going, but it’s not being matched by job-seeker interest,” he said.

The mismatch could grow significantly under Mr. Trump’s plan to encourage local, state and private investment in infrastructure. “If there is public interest in infrastructure, where do workers come from?” Mr. Kolko asked. “Does that end up bidding up construction wages and competing with other kinds of construction activity already underway?”

Content originally published on by PATRICIA COHEN