Incoming reports on the U.S. labor market continue to surprise to the upside. For example, total nonfarm employment in America jumped by 273K payrolls in February, according to data out this morning from the Bureau of Labor Statistics. This was significantly better than anticipated and resulted in a record 113 consecutive months of job growth in this country. There was also a net upward revision of 85K payrolls to the December and January figures, which helped lift the less-volatile 3-month average payrolls gain of 243K, the best reading since September 2016 and comfortably above what is needed to keep up with U.S. population increases. Elsewhere in the report, the official unemployment rate (U-3) fell back to just 3.5 percent, a roughly half-century low, and measures of wage growth and average weekly earnings firmed.
Altogether, this was another solid monthly job report. Unseasonably mild weather likely provided a boost to hiring in February, which could be a headwind in subsequent months. The biggest detractor going forward, though, will be the still developing coronavirus situation. Indeed, the containment efforts and related supply and demand disruptions have the potential to weigh heavily on job creation in the near-term but if past epidemics are any guide, lost activity can quickly rebound once the spread of the disease is finally under control. Reiterating what we said on the blog earlier this week, the recent influx of positive data describe an economy that kicked off 2020 with some positive momentum. This does not mean the expansion will make it through the epidemic unscathed but rather that the strong footing the U.S. economy finds itself on at the start of the year leaves it much better positioned to absorb a coronavirus shock than the constant “gloom and doom” headlines in the media would suggest.
Sources: Econoday, U.S. DoL, FRBSL