A gain of just 20,000 U.S. jobs may signal a slowdown. But at least wages are rising
The United States added just 20,000 jobs in February, way below expectations of a 180,000 gain, and a sign that the job market might be beginning to cool.
The unemployment rate fell slightly to 3.8%, the Labor Department reported Friday. Wages gained 3.4% in the past year, the best annual gain since April 2009, when the United States was in the Great Recession.
Economists did not immediately panic, as hiring has been strong in recent months, and they do not see one disappointing number as a signal of an imminent recession. But the lackluster February figure comes as growth is slowing. Economic growth abroad has weakened, and the partial government shutdown and ongoing trade tensions appear to be weighing on consumer spending.
Hiring was slow in every industry except healthcare and white-collar businesses. Construction lost 31,000 jobs and leisure and hospitality, which is normally a driver of growth, was unchanged. Some experts say this could be the result of brutal weather in February, including a deep freeze in much of the Midwest.
Wages are now growing well above the cost of living. Inflation has been just 1.6% in the past year, according to the Commerce Department.
“If the party was over, we wouldn’t see those wages coming in so strong,” said Beth Ann Bovino, chief U.S. economist at S&P. “A lot of the weakness in hiring looks like it was due to seasonal factors like very cold weather.”
The unemployment rate for Americans who didn’t graduate from high school fell to 5.3% in February, the lowest level since the Labor Department began tracking that statistic in the early 1990s. Bovino says it’s another sign that the job market is still strong enough that people who were on the sidelines are searching for jobs and finding work again after years of struggle.
“We’ve seen a spike in job postings that say, ‘No experience necessary,’ or, ‘No prior experience required,’” said Julia Pollak, an economist at ZipRecruiter. “Employers really do seem hungry for workers and prepared to do more than they did in the past to develop talent when they can’t find talent.”
But some are concerned that the U.S. economy may be catching a cold as Europe, China and much of the developing world struggles.
U.S. stocks fell when trading opened, continuing a weeklong slide.
“The reality is the economy is slowing. The question now is whether it’s slowing for reasons associated with the trade war or because the rest of the world is slowing,” said Torsten Slok, chief international economist at Deutsche Bank. He called the February jobs number “slightly worrisome.”
Economists have been predicting hiring would slow down for a while now. Job openings exceed the number of unemployed, meaning there aren’t many Americans left to hire and many companies complain they can’t find the talent they want.
The current labor market is widely viewed as the best since the start of the 2000s, most economists and business leaders say. There is so much demand for highly skilled workers with specialized data and computer skills that employers are sometimes hiring workers when they don’t have a specific job opening for them, just to have them on payroll when they’re needed.
“We know there will be demand for them soon,” said Martin Fleming, chief economist at IBM, who said the company has been hiring MBAs and people coming out of doctoral programs even when there isn’t necessarily a job posting for them because it’s a “highly competitive landscape” with IBM, Facebook, Amazon, Google and others vying for top young talent.
The gains are also starting to show up in some lower-skilled jobs. Wages have generally been rising fastest for the lowest-earning workers, a sign that it’s getting harder to find people for all kinds of jobs, even in restaurants and retail, and that minimum wage increases in 19 states in January are having an impact.
Many economists were quick to point out that the data can jump around a lot month to month, and January saw a particularly strong 311,000 jobs added, so the anticipation was for a weaker February. Larry Kudlow, the head of President Trump’s National Economic Council, brushed off the small February increase as a “fluky number” in an appearance on CNBC.
The last month when hiring was this slow was September 2017, when only 18,000 jobs were added. The economy added 260,000 jobs the following month.
The unemployment rate is calculated through a different survey from the jobs number, and the two sometimes diverge, which may partly explain how the official unemployment rate fell despite the slow job growth.
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