This article, originally published at 9:30 a.m. on Friday, March 10, 2017, has been updated with statistics and economist comments.
If the Federal Reserve needed more evidence to support its third rate hike since the financial crisis, jobs data for February just delivered it.
U.S. employers added some 235,000 workers during the period, the first full month of real estate mogul Donald Trump's presidency, according to the U.S. Labor Department. The gains, coupled with an unemployment rate of 4.7%, were reported just days before next week's meeting of the Fed's monetary policy committee -- a session in which futures trading already indicated a 100% chance of a 25 basis-point rate hike.
"This was the last significant hurdle for the Fed," Ryan Sweet, director of real time economics at Moody's Analytics, said in a telephone interview. "Barring some significant financial shock or geopolitical event, I think the Fed's going to raise rates."
Steady employment gains and stable economic growth have already spurred many committee members, including Governor Lael Brainard, Chair Janet Yellen and New York Fed President Bill Dudley, to suggest over the past several weeks that they would support such a move and prompted Bank of America Merrill Lynch (BAC) , which had predicted only two increases this year, to revise that assessment.
"We now expect the Fed to deliver a hike at the March meeting," and follow up with two more, probably in September and December, U.S. economist Michelle Meyer said in a note to clients earlier this month. "While we threw in the towel and moved to a forecast of three hikes this year, we still think that if faced with a negative shock -- in the economy, policy or markets -- the Fed will turn back to its risk-management ways."
An increase, which would likely take short-term rates to a range of 0.75% to 1%, could buoy companies from Citigroup (C) to Wells Fargo (WFC) , since lenders typically benefit from passing higher rates on to borrowers more quickly than depositors.
After the most recent hike, in December, Bank of America, JPMorgan Chase (JPM) , PNC (PNC) and SunTrust (STI) all boosted their prime lending rates, the amount charged to the best customers, to 3.75% from 3.5%.
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Even before Friday's report, the Fed "was pretty much looking to go in March," Joseph Song, a U.S. economist with Bank of America, said in a telephone interview. "The only risk was if you got a really weak number today in the employment report, would that deter them?"
The strong numbers that arrived instead, however, jibed with the assessment of Deutsche Bank's (DB) chief U.S. economist, Joseph LaVorgna. He had predicted "relatively robust" growth of more than 200,000, buoyed by a rebound in state and local government hiring and above-average construction work during an unusually mild February.
Indeed, a report by payroll processor ADP (ADP) earlier in the week showed 66,000 new construction jobs, which Lavorgna said was the biggest one-month gain since 2006. The month was the second-warmest February in records dating to 1895, according to the National Oceanic and Atmospheric Administration.
The Labor Department report, which showed 58,000 new construction jobs with gains in specialty trades and engineering, backed up the ADP survey and accounted for almost 25% of the total increase.
Because warm temperatures arrived early, however, there may be smaller construction gains later in the year, economists warned. And the shift wasn't beneficial to all industries: Retail jobs dropped by 26,000.
"The weather is something of a double-edged sword," Bank of America's Song said. "On the upside, you saw better employment activity in the construction sector," he noted, but "on the flip side, you saw retail sales employment decline in February. That was probably due to weak sales in cold weather gear, so those trends would potentially reverse in coming months."
Still, the report's overall strength shows the U.S. economy is moving ever closer to full employment. "There's not a lot to complain about," Sweet said. Hiring in January was boosted to 238,000 from an original figure of 227,000, and average hourly earnings for all employees increased by 6 cents in February to $26.09. That followed a 5-cent climb the previous month.
The numbers buoyed morale at the White House, whose occupant has already claimed credit for delivering on a campaign promise to add jobs. Trump shared with his Twitter followers a Drudge Report item that cited the top-line February number with a reference to 'Great Again,' his campaign slogan.
Futures trading in major U.S. indexes promptly ticked up and the S&P 500 and Dow Jones Industrial Average stayed in positive territory for much of the day, reflecting the optimism previously displayed in opinion surveys.
Earlier this winter, JPMorgan Chase (JPM) reported that about 76% of executives of middle-market companies, with yearly revenues between $20 million and $500 million, believe Trump's administration will have a positive effect on their businesses.
Even more strikingly, they're twice as upbeat about the U.S. economy as they were a year ago: 80% describe themselves as optimistic, compared with 39% in 2016, the New York-based bank found.