February Created Far Fewer Jobs Than Expected

Wages hit 10-year high in latest employment report

Roy Maurer By Roy Maurer March 8, 2019
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Labor market watchers expected a slowdown of the spectacular jobs growth of recent months, but not the crashing halt the Bureau of Labor Statistics (BLS) delivered today.

U.S. employers added just 20,000 jobs in February, according to the latest BLS report, well below the 170,000-180,000 jobs economists had predicted and far less than the 311,000 jobs added in January. 

"The economy stumbled in February," said Andrew Chamberlain, chief economist at Glassdoor. The employment numbers "may be an early sign that slowing global growth, trade tensions, stock market volatility, and the recent federal government shutdown are weighing on the job market."

February's meager employment growth was the weakest in 17 months, lowering average monthly job gains to 186,000 for the past three months, far below the 223,000 monthly average achieved in 2018.

The ADP Research Institute and Moody's Analytics had anticipated fewer jobs, but not this few: their March 6 report showed private-sector employment had risen by 183,000 in February. "The economy has throttled back and so too has job growth," said Mark Zandi, chief economist of Moody's Analytics. "Job gains … have likely seen their high watermark for this expansion."

There's no cause for alarm, said Martha Gimbel, research director for Indeed's Hiring Lab. "No one should panic yet," she said. "There have only been two months in this recovery that created fewer jobs than [February], but both were followed by strong job growth. At this moment, there is no reason to think that we will not see a return to solid job growth next month."

Julia Pollak, a labor economist at online employment marketplace ZipRecruiter, noted that "the economy is still producing far more jobs than is necessary to keep pace with population growth."

Josh Wright, chief economist for recruitment software firm iCIMS, recommended employers "focus on the trend, and cancel out the noise—the three-month moving average landed right where economists expected the one-month number to be, around 185,000."

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Construction Sees Steep Decline

Several industries posted job losses in February, diminishing recent gains. Construction shed 31,000 jobs, partially offsetting an increase of 53,000 jobs in January. Retailers lost over 6,000 jobs, and transportation and warehousing lost 3,000 jobs. The BLS recorded zero new jobs in leisure and hospitality after that sector posted job gains of 89,000 in January.

"Construction is particularly susceptible to weather-related swings at this time of year," Wright suggested.

The manufacturing industry recorded just 4,000 new jobs in February, a disappointment after increasing by an average of 22,000 per month over the last year. "The big drop-off in breadth of manufacturing gains may be a bellwether, although it was encouraging to see the total remained positive," Wright said.

The strongest job gains in February were in professional and business services (42,000 jobs added), health care (21,000 jobs) and wholesale trade (11,000 jobs).

"Midsized companies have been the strongest performer for the past year," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "There was a sharp decline in small business growth as these firms continue to struggle with offering competitive wages and benefits."

Unemployment Falls

The unemployment rate dropped to 3.8 percent in February from 4 percent the month before and the number of people claiming unemployment decreased by 300,000 to 6.2 million.

"Furloughed federal employees returned to work in February," Chamberlain said. "The number of Americans working part-time for economic reasons—usually because they can't find full-time work—plummeted in February by 837,000, a sign that the underlying jobs market remains healthy."

The nation's labor force participation rate held steady at 63.2 percent. "Retiring Baby Boomers and other demographic trends are steadily pushing that figure downward, so even one month of steady labor force participation is a positive sign that workers are rejoining and remaining in the job market," he said.

Wages Rise Again

Average hourly earnings increased 11 cents in February to $27.66, the seventh-straight month that year-over-year wage growth was at or above 3 percent and the largest increase since 2009.

Chamberlain said that Glassdoor has continued to see pay rising fastest in the nation's coastal technology hubs, with San Francisco, Seattle and Boston leading among cities for wage gains in February.

"Employers have for months been citing finding skilled workers as their number one business challenge," Pollak said. "To address that problem, they have been raising wages, expanding training efforts and improving working conditions."

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