Make It Two In a Row: US Generates Another Month of Strong Job Growth
For the second month in a row, U.S. firms blasted past hiring expectations, adding 273,000 net new jobs in February according to Friday’s national employment report released by the Commerce Department.
The unexpectedly strong report was further bolstered by revisions to December and January payroll data that added an astounding 85,000 jobs in those months combined, bringing the three-month average job gain to 243,000 per month, a rate not seen since September 2016.
The unemployment rate ticked back down to its 50-year low of 3.5%.
The survey of employers used to compile this data was administered in the second week of February before it became apparent that the coronavirus outbreak in China had spread throughout much of the globe, including the U.S. A potential preventative vaccine is at least a year or more away, according to health officials, and therapeutic treatment remains uncertain and probably won’t be available until late spring at the earliest.
To avoid widespread transmission, factories in China and other Asian nations had halted operations and workers were isolated or quarantined. Several nations have closed their borders to visitors from impacted areas, and many national and international companies are now restricting business travel.
This has led to interrupted supply chains for manufacturers and a drop-off in demand for transportation services as well as travel and tourism-related services. In the U.S., as people avoid large public gatherings and events, leisure and hospitality, live entertainment and retail sectors are likely to be impacted.
While the economic impact of the virus remains unknown, the February jobs report offers insight into the underlying strength of the labor market before impacts from the virus begin to be reflected in the economic data and may suggest the economy’s resilience amid continued uncertainty.
Strong hiring in the first two months of the year shows that job growth has been accelerating from the second half of 2019, and labor market conditions continued to tighten. With unemployment again at a historic low, firms were reporting difficulty finding qualified workers for job openings while continuing to add workers to their payrolls.
The results come as somewhat of a surprise as listed job openings began trending downward late last year, mostly in transportation, warehousing and utilities, in addition to others in retail and real estate industries. The transportation sector saw a decline in hiring in February, losing more than 12,000 jobs in couriers and messengers and 2,000 in rail transportation. Real estate firms, on the other hand, added almost 13,000 positions.
While job openings may be trending downward, there were no signs of employers reducing headcount as initial claims for unemployment insurance reported this week actually fell.
Many industry sectors reported strength in Friday’s jobs report. Manufacturers added 15,000 positions overall, reclaiming most of the losses seen in January after the phase one trade deal signed with China that month eased some of the uncertainty in the sector.
Still, as a share of overall employment, manufacturing jobs remain at 8.4%, a historic low. With supply chains further disrupted by factory closures in Asia and slowing trade flows, the sector is likely to see a marked slowdown in coming months.
Construction extended its January job gains by adding 42,000 positions in February as milder winter weather allowed building activity to go on. Jobs were added in both residential and nonresidential projects. With the healthy housing market responding to rock-bottom interest rates, the sector is likely to continue adding workers into the spring and summer season.
Professional and technical services also continue to grow, expanding demand for office space. More than 32,000 positions were added in February in legal offices, architectural firms, computer systems designers and R&D shops. Medical office space also saw strong demand as demographics and an aging population bolster the nation’s health services industry. Health care added 31,600 positions in February, with 23,600 added in medical offices and 7,800 in hospitals.
This sector is certain to see strong job growth as response to the health crisis deepens. Congress just approved $8.3 billion in emergency funding to address the COVID-19 outbreak.
The retail industry continues to turn away from brick-and-mortar outlets, losing 7,000 positions in February. However, other retail space occupiers, such as restaurants, bars and personal and laundry services added 53,500 workers in February, to more than offset those losses. Other sectors of experiential retail, such as amusements and recreation, had previously shown signs of expansion, but fears of attending public events or mingling with crowds are expected to weigh on employment in these sectors going forward.