U.S. payrolls added just 20,000 workers in February, slowing sharply after outsize gains in January despite a government shutdown.
The increase reported by the U.S. Labor Department on Friday was a fraction of the average estimate of 181,000 from economists surveyed by FactSet. The unemployment rate, calculated separately, fell to 3.8 percent from 4 percent in January and compares with a nearly 50-year low of 3.7 percent in November.
“Slowing job growth is to be expected over the coming year, one way or the other,” said Mark Hamrick, senior economic analyst for Bankrate.com, whose data suggests average gains of 166,000 a month over the next year. That’s in keeping with the average of 165,500 for the first two months of 2019, but markedly below the average of 223,000 for all of last year.
The number suggests that the U.S. economy is in no danger of overheating and that the central bank can continue to wait before raising short-term interests rates beyond the current range of 2.25 to 2.5 percent, Hamrick added. The Fed’s four increases last year prompted pushback from President Trump, who said they were hurting record economic growth that he had campaigned on delivering.
“The print was shocking when came out, but taken in context with what happened in the last three or four prints, where it was well above survey numbers, it’s still showing job growth in the U.S.,” Doug Clark, chief portfolio strategist at Prime Advisors, told the Washington Examiner. Prime Advisors, which invests in bonds and other fixed-income securities, has $17.7 billion in assets.
While monthly growth was much lower than the estimated 200,000 from Michael Gapen of Barclays Plc, it bears out his prediction that last year’s growth surge would begin to slow as the impact of 2017’s tax cuts fade. Morgan Stanley’s Ellen Zentner had forecast that the labor market would decelerate even more, with gains of just 141,000.
Payrolls “saw a large upside surprise in January,” Zentner said before the report. “We expect some payback in February, where we look for a sharp moderation in employment growth.”
Among the worst performers was the retail industry, which added 6,100 fewer jobs than the month before, even though cuts related to the bankruptcy of iconic department store Sears, have largely been completed, as Robert Martin of Swiss lender UBS pointed out.
Manufacturers added just 4,000 positions after increasing by an average of 22,000 per month over the prior 12 months, according to the Labor Department. Growth in the industry has been a priority for the Trump administration, with trade adviser Peter Navarro crediting the White House with a resurgence that saw 284,000 new jobs in 2018, the most in 21 years, in a New York Post op-ed column on March 5.
“We’re going to be opening up the labor forces, because we have to,” Trump said during a Wednesday meeting of the American Workforce Policy Advisory Board, citing Fiat Chrysler’s plans to invest $4.5 billion in a new Detroit assembly plant while expanding five others and creating almost 6,500 jobs.
“We have companies coming into this country at a record pace, and really at a pace that nobody thought possible because nobody thought you’d ever see these particular companies again,” Trump said, predicting that the unemployment rate might drop as low as 3.6 percent. “They want to be where the action is.”
