America’s labor market remained buoyant in February, Friday’s jobs report showed. But economists are worried about whether the positive trend can hold up amid coronavirus concerns.
The US economy added 273,000 jobs in February, the US Bureau of Labor Statistics said Friday. This was far more than economists had predicted and the biggest monthly increase since May 2018.
Leading the gains were new jobs in health care and social assistance, food services and government, where 7,000 people were hired for the April Census.
America’s recovering manufacturing sector showed more signs of life, posting 15,000 new jobs. This is noteworthy given the continued issues with the production of the 737 Max jet from Boeing (BA) – America’s largest manufacturer – which is hurting the plane maker’s suppliers.
The unemployment rate fell back to the historic low of 3.5%.
Paychecks grew by 3% on average over the year leading up to February, and they grew 0.3% in the month.
There was more even good news about previous months: An already strong January report was bumped higher to 273,000 new jobs as well.
Coronavirus fears
The jobs survey was taken in the middle of February, before coronavirus fears overtook Corporate America.
The outbreak is weighing on business and investor sentiment, as well as the economic outlook. The strong report shows that the US labor market was in a good place before the outbreak reached American shores.
The jobs report plus a better-than-expected services PMI from the Institute for Supply Management earlier in the week painted a very positive picture for the US economy, said Michael Hanson, SVP of research at Fisher Investments.
Many expect that the March report will reflect the damage the virus has inflicted on business activity. The next report is due April 3.
Even though the US economy appears in good shape to absorb the shock the coronavirus outbreak is dealing to economies around the world, the jobs report – like most economic data – is backward-looking and doesn’t allow a real-time assessment of the economy.
So it might be time to pay more attention to shorter term employment data like weekly initial jobless claims going forward, said Joseph Brusuelas, chief economist at RSM.
“If the virus does start to significantly impact the economy, the effect on jobless claims should begin to surface in March, with a greater impact in April,” said Bob Baur, chief economist at Principal Global Investors.
