American companies boosted hiring in February, strengthening expectations that the labor market’s recovery has shifted into a higher gear. Data released Wednesday, followed by more this morning, revealed that wages grew faster at the end of last year than originally estimated, providing welcome news for consumers, but indicating a potential inflation problem for the Federal Reserve.
Last month the private sector added 216,000 jobs, according to the ADP National Employment Report. This exceeded economists’ predictions for a gain of 208,000. “After two years of expansion without much gain in employment, we’re finally hitting the point where firms need to begin adding people in order to meet increased orders,” said Steve Blitz, senior economist at ITG Investment Research in New York. “There are still risks ahead, but if you could just stop the clock right where we are now, you’ve got a recovery that is gathering some momentum; it appears to be self-reinforcing.”
The Federal Reserve watches unit labor costs closely for signs of inflation, and noted that these rose at an annual rate of 2.8% in the fourth quarter, revised sharply up from the 1.2% pace reported Labor Department last month. Third-quarter wage growth increased to a 3.9% pace from the previously reported drop of 2.1%.
Workers received more promising news than they’ve seen in some time: hourly earnings (adjusted for inflation) rose at a 2.8% rate in the fourth quarter, revised from the previously reported increase of 1.0%. This marked the most substantial gain since the second quarter of 2010.
Wednesday’s data also revealed that consumer credit expanded sharply in January for the 5th consecutive month as Americans borrowed money to purchase cars and pay for education. However, separate reports on housing suggested that this sector remained in a slump. Home prices fell another percent in January, the sixth straight month of declines as sales of distressed properties took a toll.
Despite the promising trends, many American continue to suffer from unemployment or underemployment. There have also been a number of troubling stories in recent news regarding wrongful termination, denied L&I claims, unsound practices during the independent medical exam, and other difficulties that workers face in navigating the Department of Labor and Industries. If you need expert help to appeal a rejected L&I claim or recover your full workers compensation benefits from Washington’s L&I, contact a Seattle Employment attorney or an L&I Lawyer at Emery Reddy.