US employers add 273,000 jobs; unemployment drops to 3.5%
Friday, March 06, 2020
In February, total U.S. nonfarm payroll jobs increased by 273,000 after January’s growth of 225,000, while the unemployment rate dipped to 3.5% from 3.6% the previous month, according to the Bureau of Labor Statistics. The jobless rate has been 3.5% or 3.6% since September. February was the 24th consecutive month of an unemployment rate at 4% or lower.
In February, nearly all major groups of workers had scant change in the rate of employment versus January’s figures. Meanwhile, wage growth remained rather tepid.
“Average hourly earnings for all employees on private nonfarm payrolls increased by 9 cents to $28.52,” according to the BLS, and increased by 3.0% over the past year.
That trend of wage increases shows “some weakness after accelerating through early 2019,” according to Elise Gould, an economist with the Economic Policy Institute in Washington, D.C., in a statement.
“Relatively strong employment growth and slower wage growth than expected in an economy that has had historically low unemployment suggests that slack remains in the labor market. Workers are continuing to get pulled off the sidelines, but employers aren’t feeling much pressure to raise wages to attract and retain the workers they want.”
The rise of the minimum wage for low-wage workers in 23 states and Washington, D.C., is part of this equation. At the same time, the federal minimum wage of $7.25 an hour remains in place.
In the meantime, February’s total of long-term unemployed (those without a job for 27 weeks or more) ticked down to 1.1 million from January’s 1.2 million.
In February, the biggest U.S. companies hired 133,000 employees, nearly double January’s 69,000, according to the Automatic Data Processing National Employment Report, produced with Moody’s Analytics. February was less impressive elsewhere. Small firms of 20-49 employees hired 24,000 new workers in February compared with 94,000 in January. Midsize firms of 50-499 employees had 26,000 new hires in February after adding 128,000 workers in January.
“Job creation remained heavily concentrated in large companies, which continue to be the strongest performer,” said Ahu Yildirmaz, ADP Research Institute co-head and vice president, in a statement.
In ADP/Moody’s February employment report, the service-providing sector created 172,000 new jobs versus 237,000 in January. In the goods-producing sector, February’s 11,000 new hires was a sharp drop from January’s 54,000.
In response to the coronavirus, or COVID-19, outbreak that has spread globally from China, which has infected 100,000 people and caused 3,000 deaths, the Federal Reserve Bank announced an emergency change in monetary policy.
“The coronavirus poses evolving risks to economic activity,” according to the Fed’s March 3 statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent.” All things equal, a lower price of borrowing is an economic stimulus.
The March jobs data, unlike February’s, will show the impact of COVID-19 on economic activity. That outcome will be due in part to expected supply disruptions in the manufacturing sector, and the impact of quarantines to hospitality and leisure employment, according to EPI’s Gould.
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