Employers in the U.S. added far more jobs in February than analysts were expecting, but there are some concerns about the nation’s manufacturing sector as consumer credit slowed and the trade deficit hit a near 10-year high.

The Labor Department reported on Friday that there were 313,000 non-farm job additions last month, the most since October 2015, while the unemployment rate held steady for the fifth straight month at 4.1%. The unemployment rate remained at an 18-year low as an increase in the labor force participation rate in February kept it from declining.

For-hire trucking added 5,600 jobs in February, one of its best performances in recent memory, as the wider transportation and warehousing sector saw an increase of 15,400 jobs.

Outside of trucking there were notable job gains in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.

Average hourly wages increased 2.6% over the past year, down from 2.9% in January.

BMO Capital Markets Economic Research noted the two previous monthly increases were revised up by a total of 54,000 jobs, and the three-month trend of 242,333 is well above last year’s average of 182,333, marking an acceleration in hiring.

“The report all but cements a Federal Reserve [interest] rate hike on March 21, and, despite the easing in wage growth, leans toward four moves this year, as we expect,” said BMO.

This followed a report two days earlier from payroll processor ADP that showed non-farm private employers in the U.S. added 235,000 jobs in February, better than Wall Street estimates.

The January total of jobs added was revised upward from 234,000 to 244,000, and down from December’s level of 249,000 new jobs, which is the highest number since February 2017 when there were 280,000 job additions.

February also marked the fourth month in a row job gains were greater than 200,000.

“The job market is red hot and threatens to overheat," said Mark Zandi, chief economist of Moody’s Analytics. "With government spending increases and tax cuts, growth is set to accelerate.”

Factory Orders, Business Investment Decline

The employment reports came in the wake of one from the Commerce Department earlier in the week that showed U.S. factory orders in January posted their largest drop in six months. It also revealed business spending on equipment slowed.

After five straight months of gains, new orders for factory-made good in January fell 1.4% from December, the largest drop since July. However, factory orders during the first month of 2018 were 8.4% higher compared to the same time in 2017.

New orders for nondefense capital goods minus aircraft, a proxy for business investment, posted a 0.3% drop in January, a bit more than the 0.2% decline estimated in a preliminary report last month. This drop followed a 0.5% decline in December, marking the first back-to-back monthly declines since May 2016.

Meantime, shipments of these core capital goods fell 0.1% in January, rather than an earlier reported 0.1% gain. This followed a 0.7% improvement in December.

The decline in manufacturing took some by surprise, following earlier surveys of purchasing managers who said manufacturing was strong in both January and February. One reason could be that new orders for durable goods, those designed to last three years or more, fell 3.6% in January. In contrast, new orders for nondurable goods were up 0.8%.

Analysts at Wells Fargo Securities said the decline in core capital goods orders “does not bode well for future activity." They noted the drop in shipments is a direct input in the gross domestic product (GDP) calculation, so could push it lower once the first quarter is over.

Looking ahead, they said the pipeline does not look much better, as unfilled orders for the category declined for the second straight month.

Consumer Credit Mixed, Trade Deficit Skyrockets

Two other recent reports on January economic numbers revealed growth in consumer credit slowed and the U.S. trade deficit hit a nine-year high.

Revolving credit in the consumer space, which is primarily made up of credit card loans, showed the smallest gain since February 2015. The soft revolving number should not come as a complete surprise, as retail sales in January dropped 0.3%

“It is relatively clear that there are some seasonal factors at play. Revolving credit growth in January has consistently fell below other months since the recovery from the Great Recession,” said analysts at Wells Fargo Securities.

It noted non-revolving credit increased $13.2 billion in January, a healthy number, largely in line with its recent average monthly gain.

“We remain positive on the consumer this year, even though the first look at consumption in January has not been very encouraging,” Wells Fargo said. “As we have noted previously, the biggest risk for consumers, as well as for the U.S. economy this year, is higher inflation, which has the potential to cut into the purchasing power of income and push consumers to the sidelines.”

A separate report showed the U.S. deficit in international trade in goods and services widened to $56.6 billion in January, from an upwardly revised figure of $53.9 billion in December.

This was larger than most analysts expected and the largest trade deficit the country has incurred since October 2008. Although the value of overall imports was more or less flat in January relative to the previous month, exports of goods and services fell by $2.7 billion in January.

Wells Fargo said the weakness in exports was largely due to a drop in the volatile aircraft sector. The value of petroleum exports also declined, despite an upward trend in prices the past few months. During the same time, the value of petroleum imports shot up by $3.2 billion, which largely cancelled out the $3.6 billion drop in non-oil imports.

“The value of oil imports has followed a downward trend over the past five years," Wells Fargo said. "These trends reflect the sharp increase in American oil production that has occurred in recent years. Moreover, the weakness in non-petroleum exports…were also one-off events.”

Wells Fargo believes solid economic growth in the rest of the world, in conjunction with the lagged effects of past dollar depreciation, should support American export growth in coming months. Likewise, strong growth in U.S. domestic demand should continue to pull in non-petroleum imports going forward.

Nevertheless, Wells Fargo cautioned this trade imbalance, despite seasonal quirks and other factors, is likely to pull down first-quarter GDP growth when numbers about it are first released in late April.

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