United States: Non-farm payrolls remain robust in February, hit to labor market from coronavirus still to come
Non-farm payrolls rose by 273,000 in February, beating out market expectations of 175,000 and matching January’s upwardly revised 273,000 increase (previously reported: 225,000). As a result, the three-month moving average of non-farm payrolls rose to 243,000 in February from 239,000 in January. While February’s payroll gains were particularly robust, the outbreak of coronavirus will likely weigh heavily on hiring in March and into Q2, due to hampered travel, tourism and supply chains, especially given the dominance of service sector jobs in the U.S. labor market.
Employment growth was particularly robust in the health services sector in February, with stronger hiring likely linked to preparation for the coronavirus epidemic. Although job creation in leisure and hospitality were very strong in February, some of those gains could be reversed in March as the COVID-19 outbreak spreads through the U.S. Meanwhile, construction job growth remained brisk in the month and payroll gains in financial, and professional and business services were robust. Conversely, the wholesale and retail trade and transportation and warehousing sectors experienced job losses in the month.
The unemployment rate ticked back down to its near 50-year low of 3.5% in February from 3.6% in January. Meanwhile, the labor force participation rate was stable at 63.4%. Hourly earnings rose 0.3% month-on-month in February, up from 0.2% in January. Annual wage growth, however, moderated to 3.0% in February from 3.1% in January.
Commenting on the February jobs report, Francis Généreux, senior economist at Desjardins noted:
“Job creation remained surprisingly high in February as it amply exceeded consensus expectations for the second month in a row. […] This extremely strong performance on the part of employment stands in stark contrast to market sentiment, which focused more on the news surrounding the coronavirus. What remains to be seen is whether the effects of the coronavirus on the financial markets, household and business confidence and, ultimately, employment will effectively change the game.”