The US added 311,000 jobs in February, for yet another month of hot labor market growth

• New data out Friday morning shows how the US labor market looked in February.
• The US added 311,000 jobs in February, greater than the estimate.

The labor market continues to be hot in 2023, as the US saw another massive jump in jobs in February.

According to the Bureau of Labor Statistics, nonfarm payrolls rose 311,000, exceeding the 205,000 gain forecasted by economists surveyed by Bloomberg. They expected payroll growth in February to fall from January's massive initial reading last month of 517,000.

January's reading was revised to 504,000 jobs added. December's reading was revised from a gain of 260,000 to an increase of 239,000.

Leisure and hospitality led the way in payroll gains among major industries, with job growth of 105,000. Information as well as transportation and warehousing are two major industries that saw declines in February.

The unemployment rate grew from 3.4% to 3.6%. Economists surveyed by Bloomberg forecasted that this rate would stay at 3.4%, the lowest rate since 1969. Additionally, the number of people who were unemployed for under five weeks soared from 1.9 million in January to 2.3 million in February according to the latest news release from BLS.

"I think the big takeaway for me is that there has been a lot of fretting about the state of labor supply during this recovery, but folks are returning," Nick Bunker, economic research director for North America at Indeed Hiring Lab, told Insider.

Bunker added that the labor force participation rate and employment-population ratio for prime-age workers, or those aged 25 to 54, "are back to where they were in early 2020."

The overall labor force participation rate rose from 62.4% in January to 62.5% in February. Additionally, the prime-age labor force participation rate increased from 82.7% in January to 83.1% in February, which means it is above February 2020's 83.0%.

Bunker said that, "I think a lot of what has been talked about in terms of the slow return of workers is a combination of demographics" with an aging population as well as the fact that "supply does return, it just takes longer than demand."

Before Friday's data release, Aaron Terrazas, chief economist at Glassdoor, told Insider earlier this week that "January was such a surprisingly strong report, and I think many economists were happy to dismiss that as a statistical anomaly. If we get a second strong report, that really has to change a lot of narratives out there about what is going on in the labor market and the economy."

"At this point, it is very much a case where too much good news is bad news," Terrazas told Insider on Wednesday after the release of Job Openings and Labor Turnover Survey (JOLTS) that included layoffs data for January. Wednesday's JOLTS report showed the rate of layoffs and discharges did slightly increase, from 1.0% in December to 1.1% in January. However, the rate was still historically low in January even if it may seem like there are massive job cuts happening.

With a job growth forecast of about 200,000 in February, Terrazas said before the latest figures that "if we get north of" 230,000 or 250,000 jobs added then that will "make markets pretty nervous about what the implications are for interest rates."

According to CNBC reporting, S&P 500 futures ticked up slightly after the employment data release from BLS.

The Fed will meet later in March, and an interest rate hike could be 25 or 50 basis points, according to Seema Shah, chief global strategist of Principal Asset Management.

"After last month's blowout report and following Powell's delayed realisation that the economy is, in fact, very hot, the February payroll number on its own likely increases the chances of a 50bps hike in March," Shah said. "But the unexpectedly large rise in the unemployment rate and softer than expected average hourly earnings number mean that 25bps is still on the table."

Shah added that "one thing that markets can be certain of, however, is that whether the Fed hikes by 25bps or 50bps in March, there is simply no space for rate cuts later this year. Higher for longer is the one truth we know."

Friday's report also shows that average hourly earnings rose by 4.6% year over year, from $31.63 in February 2022 to $33.09 in February 2023. Earnings also rose from $33.01 a month ago in January.

"It was a great jobs report; in normal times, I think everyone would be thrilled with 311,000 payroll gains, but at a moment like the current one, it just raises a lot of anxiety about what's around the corner," Terrazas said.

This is a developing story. Please check back for updates.