Is inflation still surging? Jobs report will provide clues

WASHINGTON (AP) — A month ago, the government dropped a bombshell jobs report that showed that America's employers added a sizzling half-million-plus positions in January — twice the December gain and far more than economists had expected.

The February jobs report, to be released Friday, will be closely watched by economists who are eager to know whether the January blowout was a one-time blip or some sign of a strengthening economy.

The answer could heavily influence what the Federal Reserve does in the coming months. A second month of robust hiring could amplify fears that inflation is re-accelerating after months in which it had appeared to be steadily easing. The Fed, in response, would likely pursue a more aggressive pace of rate hikes beginning with its next policy meeting in two weeks.

Some economists say they think the central bank will announce a substantial half-point increase in its key short-term interest rate, rather than a quarter point hike as it did at its meeting in February. In testimony to Congress this week, Chair Jerome Powell made clear that the Fed would increase the size of its rate hikes if evidence continued to point to a robust economy and persistently high inflation

When the Fed raises its benchmark rate, it typically leads to higher rates on mortgages, auto loans, credit card borrowing and business loans. The goal in raising loan rates is to cool borrowing and spending and slow inflation.

Economists have estimated that employers significantly slowed their hiring in February, with a gain of 208,000 jobs, according to a survey by the data provider FactSet. Though that figure would be far below January's gain, it would still be consistent with a healthy economy.

Rapid hiring typically leads businesses to offer higher pay to attract or keep...