Experts believe the Fed will proceed with its plans to increase rates at its upcoming meeting
More Americans returned to the labor market in February, beating economic forecasts despite the market volatility stemming from the situation in Ukraine.
The Bureau of Labor Statistics said Friday that US employers added 678,000 jobs in February – a feat that President Joe Biden described as “the greatest year of job growth in American history.” The unemployment rate dropped to 3.8% from 4% in January, and the number of unemployed persons decreased to 6.3 million.
Read next: UWM vows not to cut jobs despite profit hit
“Job gains were strong again in February, with multiple aspects of the report highlighting a tight labor market,” said Mortgage Bankers Association chief economist Mike Fratantoni. “At 3.8%, the unemployment rate is likely lower than what can be sustained over the long run. With little change in labor force participation, the unemployment rate is likely to go lower in the months ahead, and we now expect it will dip below 3.5%, the very low level last reached in February 2020.”
The February jobs report is likely not enough to postpone the Federal Reserve’s plans to increase interest rates at its upcoming March meeting, according to Fratantoni.
Fed chairman Jerome Powell said that before Russia’s invasion of Ukraine, the Fed was set to begin the rate hike at its meeting in two weeks. But for now, Powell said they will “will proceed carefully along the lines of that plan.” He added that he will propose and support a quarter-percentage-point increase at the March 15-16 meeting.
Read more: Which state is the least transparent over mortgage layoffs?
While job openings are at near-record highs, mortgage lenders have had to let go of employees in the past few months due to shifting market conditions that have forced them to wind down their mortgage origination operations or even shut down business altogether. The latest in the string of layoffs were Santander Bank, Zillow, Home Point Capital, and Better.
Construction jobs were up by 60,000, with gains in both the residential (+24,000) and non-residential (+20,000) sectors. Compared to a year ago, construction employment was slightly down by 11,000.
“Permits for new homes have increased, and now we see hiring picking up. However, supply chain constraints continue to pose a challenge for builders meeting the strong demand for new homes,” Fratantoni said.
