Strong Job Growth Points to COVID’s Loosening Grip
U.S. businesses stepped up their hiring last month as the omicron faded and more Americans ventured out to spend at restaurants, shops, and hotels despite surging inflation.
Employers added 678,000 jobs in February, the largest monthly total since July, the Labor Department reported Friday. The unemployment rate dropped to 3.8%, from 4% in January, extending a sharp decline in joblessness to its lowest level since before the pandemic erupted two years ago.
Friday’s hiring figures were collected before Russia’s invasion of Ukraine, which has sent oil prices jumping and has heightened risks and uncertainties for economies in Europe and the rest of the world.
Fewer People Working Remotely
Yet the February hiring data suggest that two years after COVID-19 sparked a nationwide shutdown and 22 million job losses, the disease is losing its grip on America’s economy. More people are taking jobs or searching for work — a trend that, if it endures, will help ease the labor shortages that have bedeviled employers for the past year.
In addition, fewer people are now working remotely because of the disease. A continuing flow of people back to offices could boost employment in urban downtowns. And the number of Americans who are delaying job hunts for fear of the disease fell sharply from January, when omicron was raging, to February.
“All signs are that the pandemic is easing its hold on jobs and the economy,” said Jane Oates, president of WorkingNation and a former Labor Department official. “Very strong numbers in very uncertain times.”
Recent economic data show that growth has stayed healthy as new COVID infections have plummeted since late January. Consumer spending has risen, spurred by higher wages and savings. Restaurant traffic has regained pre-pandemic levels, hotel reservations are up and far more Americans are flying than at the height of omicron.
Effect of Russian Invasion of Ukraine
Still, escalating costs for gasoline, wheat and metals such as aluminum, which are exported by both Ukraine and Russia, will likely accelerate inflation in the coming months. Higher prices and anxieties surrounding the war could slow hiring and growth later this year, though economists expect the consequences to be more severe in Europe than in the United States.
Inflation has already reached its highest level since 1982, with price spikes especially high for such necessities as food, gasoline and rent. In response, the Federal Reserve is set to raise interest rates several times this year beginning later this month. Those increases will eventually mean higher borrowing rates for consumers and businesses, including for homes, autos and credit cards.
Chair Jerome Powell said this week he plans to propose that the Fed raise its benchmark short-term rate by a quarter-point when it meets in about two weeks. Powell has acknowledged that high inflation has proved more persistent and has spread more broadly than he and many economists had expected.
One figure in Friday’s report could provide reassurance for the Fed’s policymakers as they assess inflation pressures: Average hourly pay barely grew in February. Higher wages, while good for workers, often lead companies to raise prices to cover their higher labor costs and thereby further heighten inflation.
Americans Less Worried About COVID
The strong hiring in February occurred across most of the economy, with restaurants, bars and hotels adding 79,000 jobs, construction 60,000 and transportation and warehousing 48,000. Though the economy still has 2.1 million fewer jobs than it did before the pandemic struck, the gap is closely fast.
A survey by The Associated Press-NORC Center for Public Affairs Research found that Americans are now much less worried about COVID than they were in December and January. Mask mandates and other restrictions are ending.
Data from the restaurant reservation software provider OpenTable showed that seated diners surpassed pre-pandemic levels late last month. And figures from the Transportation Security Administration reflected a sharp increase in the number of people willing to take airplane flights.