The numbers: The U.S. created 379,000 new jobs in February — the biggest gain in four months — in what’s likely to be a preview of a surge in hiring in the months ahead as most people get vaccinated and the economy fully reopens.
The increase in hiring last month was concentrated at businesses such as restaurants, retailers, hotels and entertainment venues as states eased restrictions on customer limits and public gatherings. Most other industries also added workers.
Hiring was also much stronger in January than initially reported.
The U.S. economy added the most new jobs in February in four months. Above, a hiring sign is displayed on a Target store in California.
The official unemployment rate, meanwhile, slipped to 6.2% from 6.3%, although economists widely believe the real rate is much higher.
Federal Reserve officials peg the jobless rate at closer to 10% after adjusting the data for distortions caused by the pandemic.
The rebound in job creation in February is likely the start of a major new cycle of hiring. Warmer weather, falling coronavirus cases, rising vaccinations and another massive increase in federal stimulus are likely to act as jet fuel for the economy in the spring and summer, Wall Street pros and Fed officials say.
The increase in new jobs easily exceeded Wall Street expectations. Economists surveyed by Dow Jones and The Wall Street Journal had forecast 210,000 new jobs. Stocks rose in premarket trading.
What happened: New jobs in leisure and hospitality — restaurants, hotels, casinos, theaters and the like — surged by 355,000 last month to account for most of the hiring in February.
These companies had lost more than 500,000 jobs in December and January after coronavirus cases reached a crescendo and the weather turned cold.
Hiring is likely to spring back even stronger in the months ahead as the weather warms and Americans fell more confident traveling, dining out, going to a game or visiting a museum or amusement park.
Professional firms also added 63,000 employees — though most were temporary — while health-care providers and retailers both filled 40,000-plus jobs. Manufacturers chipped in with 21,000 new hires
Employment in construction fell by a surprising 61,000 even though companies are desperately seeking to hire. Poor weather last month was the main culprit.
Home sales have soared during the pandemic, but builders are facing a shortage of skilled workers that probably won’t ease up even if the pandemic does.
State and local governments also shed 86,000 jobs last month, mostly in education, but the decline likely reflects seasonal distortions tied to the pandemic. Private-sector hiring rose an even stronger 465,000 in February when government is excluded.
A smallish 50,000 people, meanwhile, rejoined the labor force in February, but that still means some 4.2 million people have gone missing during the pandemic. Those people are no longer counted in the official unemployment rate, making it artificially low.
The number of jobs created in January was revised up sharply to 166,000 from 49,000. The employment decline in December was raised to 306,000 from 227,000, however.
The big picture: The economy is poised to start growing by leaps and bounds again after a tough winter — if the coronavirus vaccines prove very effective.
An effective vaccine will allow states to remove all restrictions, let Americans go about their lives again without fear for their safety and give companies the incentive to hire. Fresh government financial aid will only add to the budding momentum.
What they are saying? “With vaccine distribution continuing to accelerate and with the economy in the initial stages of a reopening, the coming months should see robust gains,” said chief economist Curt Long of the National Association of Federally Insured Credit Unions.
‘The engine of economic recovery is restarting as the pandemic’s winter wave recedes, although there is still a long way to go,” said senior economist Daniel Zhao of Glassdoor. “The economy would need to add almost 1 million jobs a month for the rest of 2021 to return to pre-crisis levels by the end of the year.”
Market reaction: The Dow Jones Industrial Average DJIA,
+0.20%
and S&P 500 SPX,
+0.02%
were set to open higher in Friday trades.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
