Caution leads to moderate US jobs growth
Economists said US job growth was probably moderate in February as higher taxes and fears of deep government spending cuts made employers cautious, suggesting there was still not enough momentum in the economy for the Federal Reserve to scale back its monetary support.
Employers are expected to have added 160,000 jobs to their payrolls last month, barely picking up from January's 157,000 count, according to a Reuters survey of economists. That would just be enough to hold the jobless rate steady at 7.9pc.
A 2pc payroll tax cut ended and tax rates went up for wealthy Americans on January 1, hurting retail sales. In addition, $85bn (€65bn) in federal budget cuts, known as the "sequester", started taking hold on March 1, a prospect that may have weighed on hiring decisions.
"Businesses are sitting tight and part of it reflects business caution ahead of the sequester. The underlying trend still points to a job market that is treading water," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
Apart from the fiscal drag, a snowstorm that buried the East Coast during the payrolls survey week could also have kept some workers at home. February's pace would be well below the 200,000 jobs per month average for the last three months, and would reflect an anticipated reversal in retail employment after sales excluding petrol and cars slowed sharply in January.
The weak trend likely persisted in February. Sales at stores open at least a year at 15 chains were up a modest 1.6pc in February. (Reuters)