The US economy just clocked its 101st straight month of job gains. But following on the heels of January’s blockbuster labour market report, February’s headline number marked a sharp and unexpected slowdown for the US jobs machine.
A paltry 20,000 US jobs were created in February, dramatically lower than the 180,000 jobs economists polled by Reuters had expected.
The anaemic figure bolsters the view that after growing 2.9 percent in 2018, the US economy is on track for a disappointing first quarter this year.
“The slump in payroll employment growth in February reinforces the message from the incoming activity data that economic growth is slowing below its two percent potential pace in the first quarter,” Michael Pearce, senior US economist at Capital Economics wrote in a note.
Snowy weather is partly to blame for February’s weak jobs creation which was the slowest since September 2017, when a hurricane sapped the labour market.
Only 4,000 manufacturing jobs were created in February, far below the previous 12-month average, while construction shed 31,000 jobs.
But one month is not a trend. And there were bright spots in February’s employment picture.
Picture isn’t all bad
Federal employees furloughed during the five-week government shutdown returned to work last month which helped push the unemployment rate back below four percent, and contribute to a sharp fall in the number of people working part-time who’d rather have full-time jobs.
Some sectors of the job market posted relatively decent gains in February including professional business services and healthcare.
Meanwhile, the already strong employment figures for December and January were both revised upward to show a combined 12,000 more jobs were created than previously reported.
And American paycheques grew fatter in February. Average hourly wages rose $0.11 or 0.4 percent last month, pushing the annual wage increase up to 3.4 percent.
That wage growth is even more encouraging because US productivity has also picked up recently, which means those bigger paycheques are unlikely to stoke inflation and prompt the Federal Reserve to raise interest rates.
“That increase in wage growth is not enough to generate a pick-up in price inflation,” wrote Capital Economics Pearce, “which increasingly reinforce officials’ patient stance.”