U.S. jobs growth: not enough to impress the Fed

Rate threshold still years away.

Today’s jobs report from the Bureau of Labor Statistics is sure to start traders south of the border off to a good weekend.  If you haven’t seen the release, here’s the news in a nutshell: Uncle Sam churned out some 236,000 jobs in February, well above the market forecast of 165,000. Unemployment, measured in a different survey, edged down to 7.7% from 7.9% in January and, for once, not just because more Americans gave up the job search: 170,000 said they had found employment, meaning those who dropped out of the labour force were less than half the total.

All this is reason to cheer, but it will be a while before the Fed is satisfied that it’s time to raise interest rates.

Back in December, the bank pegged a rate hike to a decline in the unemployment rate to 6.5%, provided inflation stays within 2.5%. Even if the labour market kept adding 215,000 new net jobs a month, though, it would take until the end of 2017 for the jobless rate to drop to 6%, TD economist Martin Schwerdtfeger noted in a brief today.

Another way to show just how much longer the labour market has to go is to look at the BLS’s Job Openings and Labour Turnover Survey, which Fed Vice Chair Janet Yellen said this week is one of the indicators the bank keeps an eye on.

As the chart below shows, and as Yellen pointed out, while layoffs and discharges returned to their historic levels rather quickly after the financial crisis, hires are still far below pre-recession levels. And so are quits — there are still lots of Americans who are holding on to jobs they’d rather leave for fear they’ll find themselves out of work.

Unlike the Canadian labour market, which is recovering as it always has after a recession, the U.S. jobs landscape is still a long away from normal.

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Erica Alini is a California-based reporter and a regular contributor to, where she covers the U.S. economy. Follow her on Twitter: @ealini.