NEW YORK – United States hiring was the weakest in more than a year while wage gains were the fastest of the expansion and the unemployment rate fell, a possible sign that America’s jobs engine is starting to slow down. Treasuries rallied while the dollar and stock futures fell.
Nonfarm payrolls increased by 20,000 in February after an upwardly revised 311,000 gain the prior month, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 180,000. Average hourly earnings rose a better-than- projected 3.4 percent from a year earlier, while the jobless rate declined to 3.8 percent, near a five-decade low.
Even with faster pay raises, the big miss on payrolls may fuel concern about the mood among U.S. consumers following a December retail-sales slump that was the worst in nine years. Economists project the expansion will slow this year, amid weaker global growth and the fading impact of fiscal stimulus such as President Donald Trump’s tax cuts.
At the same time, policy makers and economists might wait for several months of weak hiring before concluding there’s cause for concern in the labor market. Some of the weakness could be chalked up to winter weather, as construction jobs fell by 31,000, though many other sectors were soft including education and health services as well as leisure and hospitality.
Even with the pickup in wages, Federal Reserve policy makers have indicated this year they won’t raise interest rates again until seeing inflation advance. Fed Chairman Jerome Powell said in congressional testimony last week that “the job market remains strong.’’
February miss
This marked the first February since 2011 that the initial reading on payrolls missed the median estimate of economists. The 20,000 gain was the lowest since September 2017, a month marked by the impact of several major hurricanes.
Manufacturing payrolls increased by 4,000, trailing the 12,000 median forecast. Retail jobs fell by 6,100, while education and health services posted a meager gain of 4,000 and leisure and hospitality payrolls were unchanged. One solid reading was professional and business services, with a 42,000 increase.
The labor-force participation rate was unchanged at a five-year high of 63.2 percent, while the employment-population ratio, another broad measure of labor-market health, held at 60.7 percent.
Companies have said shortages of skilled workers limit expansion plans. In addition, broader headwinds include continuing uncertainty surrounding trade tension with China, a waning boost from fiscal policy and threats from abroad.
Just this week, the Organization for Economic Cooperation and Development cut its 2019 global growth forecast to 3.3 percent from 3.5 percent, China lowered its economic growth target, and the European Central Bank slashed its projection for the region.
Average hourly earnings for private workers rose 0.4 percent from the prior month, topping estimates, following a 0.1 percent gain. The annual increase came after a downwardly revised 3.1 advance. Average hourly earnings for production and non- supervisory workers accelerated to a 3.5 percent annual gain.
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Revisions added 12,000 to the payrolls tally from the prior two months. Private payrolls rose by 25,000 in February, compared with the median estimate for 170,000. Government payrolls decreased by 5,000. The average work week decreased to 34.4 hours from 34.5 hours in the prior month; a shorter workweek boosts average hourly pay. The U-6, or underemployment rate, plunged to 7.3 percent from 8.1 percent. This includes part-time workers who want a full-time job and people who are less active in seeking work. A separate government report Friday showed new-home construction rebounded in January by more than expected as building permits hit a nine-month high, indicating the housing market is stabilizing amid lower mortgage rates.
