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Jobs Report for February: Here’s What to Expect U.S. Added 273,000 Jobs in February; Unemployment at 3.5%
(about 4 hours later)
The Labor Department will release hiring and unemployment figures for February at 8:30 a.m. Eastern time. Here’s what to watch for: ■ 273,000 jobs were added in February. Analysts had expected a gain of about 165,000, according to MarketWatch.
Wall Street analysts expect a falloff from the previous month’s strong performance, with payroll gains of roughly 165,000, down from the 225,000 initially reported for January. ■ The unemployment rate was 3.5 percent.
The unemployment rate is expected to drop to 3.5 percent. ■ Average hourly earnings rose by 0.3 percent The year-over-year gain is now 3 percent.
Average hourly earnings are predicted to rise by 0.3 percent, after moving up 0.2 percent the previous month. That would push the year-over-year increase down to 3 percent. For the second month in a row, the economy churned out a blockbuster number of jobs, the government reported Friday, an impressive showing in an era of slow-and-steady employment growth.
Every jobs report looks backward, but the February data captures a particularly unusual moment, before the market was gripped with anxiety about the global economic impact of the widening coronavirus outbreak. But with the coronavirus outbreak shaking economic confidence, the solid showing may not be a harbinger of continued strength.
Nonetheless, the monthly report from the Department of Labor was chock-full of encouraging news. Revisions to data from prior months added 85,000 jobs, bringing the monthly average gain in the last three months to 243,000. The jobless rate ticked down, and the labor force participation rate held steady. And the average number of hours Americans worked inched up to 34.3 a week.
“It’s certainly a relief that we had a strong tailwind,” said Diane Swonk, chief economist at Grant Thornton. “Service, leisure and hospitality, these are all very vulnerable. The good news is that these workers had some cushion ahead of time. It helps blunt the blow.”
Hiring was also hearty in education, social assistance and health care. Professional and financial services bolstered their ranks, and construction, which was aided by an unusual stretch of warm weather, added 42,000 jobs.
Federal and state governments added workers, including several thousand temporary census hires. But a broader measure of unemployment that includes part-timers who would prefer full-time jobs and those too discouraged to keep up the job hunt, edged up to 7 percent.
Every jobs report looks backward, but February’s report captures a particularly unusual moment before the market was gripped with anxiety about the global impact of a widening epidemic.
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“There is a red line in the calendar,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The value of it is that this report gives us kind of a benchmark of where we were before things began to go wrong.”
The government’s estimate of payroll increases is based on surveys of companies completed by the middle of the month, when the prevailing sentiment was that the health and economic effects would be contained and the United States would remain relatively unaffected.The government’s estimate of payroll increases is based on surveys of companies completed by the middle of the month, when the prevailing sentiment was that the health and economic effects would be contained and the United States would remain relatively unaffected.
To Ian Shepherdson, chief economist at Pantheon Macroeconomics, the value of this report is that “it gives us kind of a benchmark of where we were before things began to go wrong.” A clearer picture of the impact on the labor market from disrupted supply chains or travel, entertainment and dining plans should emerge over the next couple of months.
A clearer picture of the impact on the labor market from disrupted supply chains or changes in travel, entertainment and dining plans should emerge over the next couple of months.
The result is that Friday’s report can be interpreted to suit anyone’s sentiments.The result is that Friday’s report can be interpreted to suit anyone’s sentiments.
“The risk is that the market will downplay a good number and exaggerate a bad number,” said Lee Ferridge, head of macro strategy for North America at State Street, a large financial institution based in Boston.“The risk is that the market will downplay a good number and exaggerate a bad number,” said Lee Ferridge, head of macro strategy for North America at State Street, a large financial institution based in Boston.
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“If it’s a decent number, the market’s going to be ‘Yeah, that was before the situation deteriorated,’” he said. “And if it’s a weak number, the market reaction will be ‘Oh, we were weakening before it started getting worse.’”
The average weekly hours worked may indicate whether supply chain disruptions linked to the outbreak are cutting into production.
“Where it’s likely to affect the labor market is in reduced hours for service workers,” said Diane Lim, an economist at the Penn Wharton Budget Model. “Entertainment, hospitality, food and lodging, service jobs — they won’t lose their jobs but will probably get a cut in hours.”
Over the last few months, the average number of hours worked a week has been 34.3. If it were to fall, “that would be a very negative signal to me,” Mr. Ferridge of State Street said. The last time it hit 34.2 hours was in January 2011.
In 2019, year-over-year wage growth reached 3.5 percent. In recent months, it has not come close to that peak. The continued sluggishness despite record-low jobless rates remains a puzzle.
Minimum-wage increases taking effect this year in various cities and states may start to push up earnings. But most economists expect wage gains to stay flat. “The 12-month growth rate has been chugging along at 3 percent,” said Ben Herzon, chief economist at IHS Market. “And I don’t expect anything different there.”
Diane Swonk, chief economist at Grant Thornton, said she expected that the report would reflect some retail-store closings as well as declines in manufacturing and mining. In January, Boeing suspended production of the 737 Max airplane, which had been involved in two calamitous crashes, and that move has begun to take a toll on its suppliers.
There were scattered reports this week about a potential downturn in employment in the most vulnerable sectors: transportation, hospitality, entertainment and travel.There were scattered reports this week about a potential downturn in employment in the most vulnerable sectors: transportation, hospitality, entertainment and travel.
Airlines are clearly feeling the squeeze. United Airlines announced on Wednesday that it was imposing a hiring freeze through June, postponing scheduled merit raises and inviting employees to apply for unpaid leave. Airlines are clearly feeling the squeeze. This week United Airlines announced that it was imposing a hiring freeze through June, postponing scheduled merit raises and inviting employees to apply for unpaid leave.
“Layoffs are here,” said a respondent in the transportation-equipment sector when surveyed by the Institute for Supply Management for its monthly manufacturing report. The number of canceled or postponed conferences are racking up, which not only hurts hotels and convention centers, but also restaurants and stores that cater to visitors to those events.
But so far, severe dents in employment seem more feared than real. The labor market has been remarkably resilient, delivering job gains for 112 months in a row despite global slowdowns, bitter trade fights and stock market gyrations. “Layoffs are here,” said a respondent in the transportation equipment sector when surveyed by the Institute for Supply Management for its monthly manufacturing report.
Becky Frankiewicz, president of North America at ManpowerGroup, an employment agency, said she had not seen any pullback, even in the hospitality and travel industries. “We continue to see a huge demand” for temporary and permanent workers, she said. But so far deep dents in employment seem more feared than real.
The labor market’s strength early this year should give the economy some cushion against the shock of the coronavirus, said Karin Kimbrough, chief economist of the professional networking site LinkedIn. “We have lots of job openings and we are adding to them,” said Rick Woldenberg, chief executive of Learning Resources in Vernon Hills, Ill. The company, an educational materials and toy manufacturer, employs 200 people in the United States, and has at least 10 openings in sales, marketing and operations. “If you know somebody good who lives in Chicago and wants to work for a cool company,” he said, “send them our way.”
The company’s suppliers are in Guangdong, a Chinese province that has not been at the center of the outbreak. There have been a few kinks in orders and deliveries, he said, but nothing unusually serious.
“Businesses crave certainty, and certainty isn’t the word of the day,” Mr. Woldenberg said. So he is doing what many business owners always do: managing as best as they can.
“I’m just an elf at the workbench,” he said, explaining his reaction to the conflicting and confusing economic signals. “We’re just soldiering on.”
Amy Glaser, senior vice president at the staffing firm Adecco, said, “We’re not seeing an impact yet.” The one trend she has noticed in the last few days is that employers are arranging for preliminary interviews to be done remotely instead of in person.
Becky Frankiewicz, president for North America at ManpowerGroup, an employment agency, said she, too, had not seen any pullback, even in the hospitality and travel industries. The labor market is tight, she said. “We continue to see a huge demand” for temporary and permanent workers.
The situation could rapidly shift, but so far, the impact has not trickled through to hiring.
At Eastman Machine Company in downtown Buffalo, Robert Stevenson, the president and chief executive, said he wanted to add at least six people to his 137-person payroll.
“We had a great year last year and business is good,” said Mr. Stevenson, who also has a factory in Ningbo, China, a coastal city south of Shanghai. In early January, Eastman got a large order from a Chinese wind energy company that was so eager for the machinery, it agreed to pay the steep increase in airfreight prices that followed the cancellation of many flights to China.
For Mr. Stevenson, the labor shortage is still the most pressing problem. “Our issue is finding qualified people,” said Mr. Stevenson, who wants to expand his engineering and software staff.
Sluggish growth and uncertainty abroad combined with a maturing labor market at home had gradually been chipping away at job growth well before there were any alarms about a global epidemic. Cooling job creation is to be expected during the 11th year of an economic expansion.
Business investment has been slumping for months. Wage growth, too, was already slowing from its peak last year. And hiring in the manufacturing sector has been declining. In January, Boeing suspended production of the 737 Max airplane, which had been involved in two crashes, a decision that has already begun to take a toll on its suppliers.
The agreement between the United States and China to defuse trade tensions seemed likely to help businesses, including manufacturers, that had suffered from successive rounds of retaliatory tariffs. Then the coronavirus hit.
The decision by policymakers at the Federal Reserve this week to lower the benchmark interest rates by half a percentage point is evidence that the central bank is determined to move aggressively to use the limited tools it has to counter a slowdown.
At Milwaukee Electronics, a Wisconsin-based manufacturer of circuit boards, the warnings from Asian suppliers started coming in shortly after the Lunar New Year holiday in February: Prepare for delays.
“Our component vendors are telling us to brace for shortages, potentially some substantial ones,” said Duane Benson, the company’s director of marketing.
In response, the company has been saving up inventory, reaching out to suppliers to identify potential delays and working with customers to adjust timelines. What it has not had to do, however, is cut jobs or reduce hours.
In the short term, the outbreak might even be good for business. The company’s Oregon-based Screaming Circuits division, which usually handles smaller, shorter-deadline orders, has had a surge in inquiries from customers looking to bring production back from China, at least temporarily.
“We started getting calls from folks who typically send stuff offshore,” Mr. Benson said.
Of course, if disruptions persist, Screaming Circuits, too, might struggle to get the parts it needs to fill orders. If it has to give up business, it could be forced to make harder choices. But Mr. Benson said the company would try to avoid cutting jobs.
Jobless claims throughout the United States have remained at rock-bottom levels.
Over the next couple of months, economists will be watching the job market closely for signs that the outbreak is starting to affect the broader economy. If people delay vacations or cut back on restaurant meals out of fear of the virus, that could hurt some businesses.
“Where it’s likely to affect the labor market is in reduced hours for service workers,” said Diane Lim, an economist at the Penn Wharton Budget Model. “Entertainment, hospitality, food and lodging, service jobs — they won’t lose their jobs but will probably get a cut in hours.”
If companies start laying off workers, it could take longer for activity to bounce back.
“If they lose their job, that’s a different kind of confidence hit,” said Karin Kimbrough, chief economist of the professional networking site LinkedIn.
The strength of the labor market early this year should give the economy some cushion against the shock of the coronavirus, Ms. Kimbrough added.
“I don’t think we were starting from a point of weakness,” she said. “The economy in the U.S. was pretty solid.”“I don’t think we were starting from a point of weakness,” she said. “The economy in the U.S. was pretty solid.”
Ben Casselman contributed reporting.