US job creation accelerated in February, as the unemployment rate plunged to a fresh six-and-a-half year low, adding further assurance the labour market was heading toward full employment.
Nonfarm payrolls increased by 295,000 in February, compared with expectations calling for 240,000, the Department of Labor reported on Friday. Job growth was revised down to 239,000 in January from 252,000, official data showed.
Employers have added an average of 266,000 jobs per month over the last 12 months. Job growth has accelerated in the last three months, averaging 288,000.
The unemployment rate edged lower in February, falling to 5.5 percent from 5.7 percent. That was the lowest rate in more than six-and-a-half years. Labour force participation was 62.8 percent, little changed from January’s rate of 62.9 percent.
Most industries reported job gains in February, led by professional and business services, which saw payrolls increase by 51,000. Employment in this sector has risen by 660,000 over the past year. Meanwhile, employment continued to rise in construction, health care, transportation and warehousing, retail trade and manufacturing.
Employment declined by 9,000 in mining activities and was virtually unchanged in wholesale trade, government services, information services and government, official data showed.
However, more plentiful jobs failed to encourage higher earnings last month. Average hourly earnings increased by just 3 cents to $24.78 in February. Average earnings had increased by 12 cents in January, the fastest single-month gain in more than six years.
The US economy is expected to return to full employment next year, an encouraging sign for the Federal Reserve, which is still deliberating when to begin adjusting interest rates. Federal Reserve Chair Janet Yellen told Congress last week the central bank would be patient in beginning to lift interest rates, suggesting that no adjustments would be made in the next few FOMC meetings. The markets had previously expected a June rate adjustment.
The Federal Open Market Committee’s next rate decision will be announced on March 18 and will be accompanied by a revised summary of GDP, inflation and unemployment forecasts. The same report will also contain a “dot plot” chart of interest rate expectations by top central bankers.
The US central bank has held its benchmark lending rate near zero since December 2008. According to the last summary of economic projections released in December, Fed officials expect interest rates to average a little more than 1 percent by the end of 2015.