US job creation screeches to a halt in February
Credit to Author: The Manila Times| Date: Sat, 09 Mar 2019 03:49:46 +0000
WASHINGTON, D.C.: US job creation ground to a virtual halt last month, the government reported Friday, a blow to President Donald Trump’s hopes for undiminished economic growth this year.
But after the unusually dramatic swing in the critical monthly data, economists — whose forecasts missed badly — hastened to say that underlying employment trends remained strong, and highlighted the hefty boost in worker pay. The figures also will be revised.
Job creation was the slowest since September 2017, which adds to widespread reports from firms nationwide complaining that worker shortages are beginning to impede growth in their businesses.
Despite the drop, the unemployment rate fell and hourly wages saw their biggest gains in nearly a decade, more evidence of the tight labor market.
The sudden collapse in hiring — including deep job cuts in the construction retail and transportation sectors — is sure to revive worries about the dwindling supply of American workers.
US employers added just 20,000 net new positions for the month, only a fraction of what economists had been expecting, while unemployment fell two tenths to 3.8 percent, its lowest level since October, according to the closely-watched Labor Department report.
Economists had been projecting a far stronger 173,000 gain. Over the last three months, job creation has averaged a slightly higher 186,000.
Trump downplayed the decline, but February still marked a dizzying tumble from January’s blow-out 311,000 net new positions — a number the White House had held out as a sign that robust economic growth would continue.
“I think you will find probably find out it averages out,” Trump told reporters on Friday. “The unemployment rate just went lower…. I think the big news really was that wages went up and that’s great for the American worker.”
The decline in the unemployment rate may seem contradictory to the weak job creation, but the figure is derived from a different survey and reflects a shrinking labor force.
The data can produce the occasional blip due to weather or other one-off factors and these numbers are subject to revision. Economists said the weakness may have been exaggerated after a big gain in the prior month or due to seasonal adjustment, meant to smooth out sharp swings due to weather or other expected elements.
Unwelcome news
The hiring slowdown may weigh on first-quarter GDP calculations, threatening to take the shine off the economy’s in the first quarter.
The US unemployment rate has been hovering 50-year lows since last year, with a hot economy’s hunger for new employees seeming to turn up new pockets of available labor every month.
But the construction, retail, mining and transportation sectors shed a combined 45,000 positions while the education sector added only 4,000 workers, down from 64,000 the prior month.
And there were no hires in February to work America’s in leisure and hospitality — a stunning halt after January’s gain of 89,000 jobs.
The 94 percent drop in total net new hiring was the biggest since August 2010.
Meanwhile, average hourly wages rose 11 cents for the month to $27.66, putting them up 3.4 percent over the same month last year — more than twice as fast as inflation.
That is an indication that at long last firms are being forced to pay more to attract workers.
The data present a mixed bag for the Federal Reserve, which has said it will hold off on additional rate increases amid signs economic growth is moderating and the absence of inflation. But if wage gains pick up speed, it could fuel concerns of inflation hawks at the central bank.
The report was also unwelcome news on Wall Street, as US stocks followed global equities lower, closing down for the fifth consecutive day to end the worst week of the year.
Jim O’Sullivan of High Frequency Economics agreed with others that special factors may be to blame for the sharp drop in hiring.
“The slowing may reflect some moderation in the trend but much of it was likely due to payback for exaggerated strength, due in part to weather effects,” he said.
Others have said the five-week government shutdown — which delayed release of the jobs data — also played a role in the January spike, as idled government employees who found other jobs temporarily may have been double-counted. AFP
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