February Jobs Report: Job Growth Drops Significantly from Previous Months
Market Intel / March 8, 2019
After four consecutive reports of more than 200,000 jobs created a month, the report of February’s 20,000 new positions was something of a downer. Even the revisions to previous months’ reports were modest, with the combined total changes for December 2018 and January 2019 coming in at only 12,000 jobs.
While the headline number was underwhelming at best, the overall unemployment rate did drop to 3.8 percent, due in part to 45,000 workers deciding to leave the labor force. Take teenagers out of the mix, and the unemployment rate for adult men and women (20 years and older) comes in at 3.2 and 3.5 percent, respectively.
Taking the establishment survey – the part of the data reported by companies – there is not much excitement. With the overall number reflecting such a small change, no surprise there. The goods-producing sector dropped 32,000 slots overall. Construction – part of that headline group – contributed a loss of 31,000 to that total, while the manufacturing component actually added 4,000 positions.
The service sector picked up 57,000 jobs; 42,000 of those adds were in the professional and business services component, with 15,000 of that in administrative support services. While education services dumped 19,000 positions, health care picked up 22,000 jobs. Almost all of those health care adds came in doctor, dentist and medical testing offices.
Leisure and hospitality jobs were exactly flat – zero job adds. Government job numbers were down, driven by changes at the state and local level. Federal employment (more on that in a moment) was also exactly unchanged from last month, but state employment fell 1,000 jobs. State educational positions dropped over 6,000 slots, but non-education jobs picked up by a little more than 5,000 positions. Local governments also dropped 4,000, with all of that decline in education-related jobs.
Just because the establishment survey suggested there was no change in federal employment, we all know there was a great deal of churn in February as we worked through the aftermath of the government shutdown. Again, as far as the federal government was concerned, all federal employees were still on the books. Contractors were someone else’s problem. The household survey reported “number of persons employed part time for economic reasons” dropped by 837,000. This is after a 490,000-job jump in this category last month. While there was no specific data pointing toward the shutdown, this was probably the closest one could use as an objective measure.
Once more – not a very exciting report after several months of strong job growth. It is only one month. One might recall September 2017, when job growth was also under 30,000 positions after several months averaging over 150,000 new jobs. Weather drove that change, just as the government shutdown probably played some role here. Average hourly earnings were up by 11 cents an hour in February, after a 2-cent-an-hour gain in January. Over the last year, average hourly earnings are up 3.4 percent, so some silver lining.
We will need to watch for corrections to this report, as well as pay particular attention to the March numbers. If March job growth is also down this hard, more than one eyebrow ought to go up, but should we return to something over 150,000 new slots with continued wage growth, these short-term worries should abate quickly.