U.S. Jobs: February Numbers Better than Expected, but Coronavirus Crash Looms

The February job numbers are out, and they're better than expected. Total employment jumped by a healthy 273,000, the same as January's surprising (corrected) numbers. The unemployment rate is back to a near-historic low of 3.5 percent, and has been at 3.5 or 3.6 percent for the past six months — so says the latest U.S. Bureau of Labor Statistics Employment Situation Summary.

Alas, this mild euphoria surely will not last. That's because the markets have been essentially in free-fall since the middle of last week, as the economic impact of a looming global coronavirus pandemic starts weighing on global stock indices. This time around, we have to take the good news with a grain of salt, knowing that a slowdown is almost inevitable.

The major markets have been plummeting since Feb. 22. Today, the Dow is down 13 percent from its Feb. 1 open. There will be an employment impact. Source: Google

What Does the Latest Report Say?

January's numbers were revised from 225,000 to 273,000, and December's from 147,000 to 184,000 (total net correction: +85,000 over both months). February's numbers, at 277,000, put the trailing quarter's monthly average at a very good 246,000 job created for each of December, January, and February.

February's most active "gainers" included health care, food services and drinking places, government, construction, professional and technical services, and financial activities. Except for the first two items on that list, there's been little growth in those sectors over the past year or longer. This makes the February numbers extremely interesting.

Food services and drinking places added 53,000 jobs for February. Over the past seven months, this sector has added 252,000 jobs, for a monthly average of 36,000 jobs. That puts February's numbers 17,000 ahead, or just over 47 percent. That's big!

Government jobs increased by 45,000, mostly thanks to gains in state government education (+16,000), and federal jobs got a boost of 8,000, thanks mostly to an influx of 7,000 U.S. Census workers. Construction added 42,000 jobs in February, after 44,000 were added in January: this comes thanks to a continued spate of warmer weather around the country.

Professional and technical services were up by 32,000 for February. Compared to the 12-month trailing monthly average of nearly 24,000, that a 20 percent bump. Financial activities were up by 26,000 for February, as compared to a 12-month trailing monthly average of just over 13,000, that's an increase that approaches 100 percent!

On the wage front, a modest monthly gain of $0.09 per hour to $28.52 continued the slow and steady increase of wages that's gone on for the past year and longer. It's not likely to bring on the party hats, but it's nice to see things continue their gradual increase, money-wise.

Perspective from National News Reporting

The Washington Post, finds a fair amount to like in its coverage of the report this morning. Authors Taylor Telford and Rachel Siegel cite "impressive growth and strength even amid concerns about the economic fallout from the coronavirus."

Telford and Siegel share my belief that this is the last sunny day for employment reports we'll see for a while, thanks to the downward pressure on global markets since Feb. 22. They also observe that, for the second month in recent history, women outnumber men in the job force (something not seen hitherto except for one month during World War II).

Finally, the Post duo also state that the wage gains remain around 3 percent, half a point above the current 2.5 percent value for the annual inflation index (source: U.S. Inflation Calculator).

Waiting for the Other Shoe to Drop

Next month's numbers will be a real test of the job market's strength. The Post writers paraphrase Julia Pollack, ZipRecruiter's labor economist, to assert that "industries with large numbers of workers who can do their jobs from home are less likely to be impacted."

Ms. Pollack observes further that ZipRecruiter "has seen the share of job postings that offer work from home increase 40 percent." Perhaps the landing won't be as hard as one might think. But I'm less than convinced that this will soften the coming blow by much. Stay tuned, and we'll see what happens when next month's numbers arrive.