Nonfarm Payrolls Rose 273,000 in February
Supporting Image for Blog Post


Implications:  A couple of weeks ago, the stock market was hitting record highs and investors were optimistic about the fundamentals of the economy.  Today's news on the job market shows the confidence investors had before recent news about the Coronavirus was justified by the data.  Obviously, the Coronavirus has had a large effect on the financial markets and is likely to have some effect on the economy as well; not a recession, but, temporarily, modestly slower growth.  Once it passes– and it will – we expect a return to the recent pre-Coronavirus trend, and that trend is solid.  Nonfarm payrolls increased 273,000 in February, easily beating consensus expectations, and higher than the forecast from any economics group.  Civilian employment, an alternative measure of jobs that includes small-business start-ups, rose 45,000.  In the past year, payrolls are up 201,000 per month, while civilian employment is up 158,000 per month.  The underlying trend, pre-virus, is somewhere in-between.  The most negative news in today's report was that the labor force declined 60,000 in February.  Still, the labor force is up 1.5 million versus a year ago, and the participation rate is tied for the highest level since 2013.  Between the jobs added and the labor force decline, the unemployment rate ticked down to 3.5% in February, tying the lowest level since 1969.  Meanwhile, workers' purchasing power continues to grow.  Average hourly earnings grew 0.3% in February and are up 3.0% from a year ago.  Total hours worked grew 0.5% in February and are up 1.7% from a year ago.  As a result, total earnings by all private-sector workers are up 4.8% in the past year.  We expect the Federal Reserve will continue to react to news about the Coronavirus by cutting rates an additional 50 basis points at the meeting on March 18.  The problem is that, when the virus passes, the Fed is likely to remove that extra accommodation very slowly, and probably not at all in 2020.  In other recent news on the labor market, new claims for unemployment insurance declined 3,000 last week to 216,000.  Continuing claims rose 7,000 to 1.729 million.  These are consistent with continued growth in jobs beyond when the February jobs data were collected. 

Click here for PDF version

Posted on Friday, March 6, 2020 @ 10:06 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.