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This morning, the Labor Department reported that the economy created a robust 243,000 new jobs last month. That was well in excess of January's revised tally of 170,000 new jobs and the 210,000 new positions many economists were expecting.
Under normal circumstances, the better-than-expected boost in nonfarm payrolls would have had the inflation hawks screeching. That's because many economists believe that hot job markets lead to wage pressures, which in turn create inflation.
But this morning's labor report included other results that don't seem inflationary at all. For example, the average workweek for nonsupervisory workers actually decreased in February by 0.1 hours. And even though factory overtime increased, it rose by only 0.1 hours, the Labor Department reported.
If the labor markets were truly tight and new workers needed to be hired, then companies would be dramatically increasing the average workweek and overtime for existing staff. But that wasn't the case last month.
"While we don't take monthly changes in employment too seriously, today's data were slightly stronger than expected on hiring, but slightly weaker on hours and utilization, thus providing a 'growth positive' outlook," says Citigroup economist Steven Wieting.
Still, Wall Street expects the Federal Reserve Board to be worried enough about inflation to raise interest rates once again when it meets on March 27 and 28.
At the start of the year, many thought the Fed would stop raising rates once the federal funds rate, which banks charge one another for overnight loans, hit 4.5 percent—which is where it is today. But many now believe the Fed will keep hiking until the federal funds rate hits 5.25 percent.
