US unemployment drops to 3.8%, lowest since February 2020

US employers hired far more workers than expected in February, propelling the labor market closer to full employment, but mounting obstacles posed by geopolitical tensions could dent business confidence and slow job creation in the coming months. .

The Labor Department’s employment report, released on Friday, showed net creation of 678,000 jobs outside the US agricultural sector last month. January’s data was revised up, showing 481,000 job openings instead of the 467,000 previously reported.

Economists consulted by Reuters predicted that 400,000 jobs would be created. Estimates ranged from 200,000 to 730,000 posts.

Labor market conditions tightened further, with the unemployment rate falling to 3.8%, the lowest since February 2020, from 4.0% in January. This happened despite the entry of more people into the workforce.

Federal Reserve Chair Jerome Powell described the job market as “extremely tight” this week, and told lawmakers he supported a 25-percentage-point rate hike at the March 15-16 policy meeting. US central bank.

Powell also said he would be “prepared to act more aggressively” if inflation doesn’t cool as quickly as expected.

Oil prices have topped $100 a barrel since Russia launched a war with Ukraine last week, invoking a barrage of sanctions on Moscow from the United States and its allies.

“There’s a lot of troubling news in the world right now, from the Russia-Ukraine conflict to sky-high inflation,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina. “But the US employment recovery remains a bright spot amid the carnage.”

On the heels of the January employment report and heightened inflation readings, financial markets even priced in a 0.5 percentage point increase in interest rates by the Fed. That is now out of the question, amid concerns about the fallout from the Russia-Ukraine war.

Economists expect up to seven rate hikes in the US this year.