US non-farm payroll growth accelerates unexpectedly in February, wages slow

Growth in US non-farm payrolls accelerated unexpectedly last month, led by hiring in the Leisure and Hospitality as well as in the Education and Health Services sectors.

However, that was not the only surprise, as wage growth failed to pick up.

According to the US Department of Labor, non-farm payrolls increased by 687,000 in February, while the unemployment rate fell from 4.0% in the month before to 3.8%.

Economists had penciled-in a 400,000 increase in non-farm payrolls and a one tenth of a percentage point dip in the unemployment rate to 3.9%.

Payroll estimates for the preceding two months were revised up by a combined 92,000.

Hiring in Travel and Leisure rose by 179,000 while in Education and Health Services it grew by 112,000.

The annual rate of growth in average hourly earnings on the other hand slowed from 5.7% to 5.1% (consensus: 5.8%).

The length of the average work week increased from 34.5 to 34.6.

Commenting on the latest jobs report, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said that the soft reading on wages was more likely "noise rather than signal" and that a rebound was likely in March.

Nonetheless, he added that: "Still, such a low print does serve as a reminder that wages won't necessarily continue to rise at a very rapid pace if labor supply continues to increase."

-- More to follow --