U.S. reports strong job growth; wage gains slow

STORY: The closely watched jobs report out Friday showed that while the U.S. labor market remains strong, it is starting to show some cracks.

Employers added 311,000 jobs in February – blowing well past expectations. Economists polled by Reuters had forecast about 200,000.

The robust number likely ensures that the Federal Reserve will keep interest rates higher for longer in order to tame inflation.

But wage inflation in February showed signs of cooling. Average hourly earnings rose 0.2% last month after gaining 0.3% in January.

And the unemployment rate rose to 3.6% last month from 3.4% in January, which had been the lowest since May of 1969.

That data prompted traders of futures tied to the Federal Reserve's policy rate to trim bets on Friday that the central bank will raise rates a half point at its meeting later this month, and instead raise them by a quarter-point.

Brian Coulton, Chief Economist of Fitch Ratings, agrees with that view.

“I don’t think they would want to go back to 50 – they won’t want to stop and then have to restart. And so that makes us think that we’re more likely to see three further hikes at 25 basis points each from here.”

Friday’s report from the Labor Department also showed that January’s surge in hiring was not a fluke. That data – which had shattered predictions – was revised lower, but not by much, showing that 504,000 jobs were added instead of the previously reported 517,000.