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If the economy is slowing down, no one told the labor market.
The Labor Department reported Friday that employers added 275,000 jobs in February, another month that exceeded expectations.
It was the third consecutive month of gains above 200,000, and the 38th consecutive month of growth — the latest evidence that America’s jobs engine is still running strong after bouncing back from pandemic shutdowns.
“We were expecting a slowdown in the labor market, a further easing of conditions, but we are not seeing that,” said Rubeela Farooqui, chief economist at High Frequency Economics.
A combined 167,000 jobs were cut in the previous two months, December and January, reflecting higher levels of statistical volatility in the winter months. This does not disrupt the picture of continued strong growth, which now looks a bit comfortable.
At the same time, based on the survey of households, the unemployment rate increased from 3.7 percent in January to a two-year high of 3.9 percent. A more detailed measure of slack labor market conditions, which includes people working part-time who would prefer to work full-time, has been rising steadily and is now at 7.3 percent.
The unemployment rate was driven by people losing or leaving jobs as well as people entering the labor force looking for work. The labor force participation rate for people in their prime working years – ages 25 to 54 – rose back to 83.5 percent, matching last year’s level which was the highest since the early 2000s.
Average hourly earnings increased by 4.3 percent during the year, although the pace of growth is slowing.
“We’ve seen real wages rise recently, and that’s encouraged people to re-enter the labor market, and that’s a good thing for workers,” said Corey Cantenga, a senior economist at the job search website LinkedIn. There is development.” As wage growth slows, more people are less likely to start looking for work, he said.
As late as last autumn, economists were predicting much more modest employment growth, with hiring concentrated in a few industries. But while some pandemic-hit industries have shed jobs, sectors like construction have not seen the expected slowdown. Rising wages, attractive benefits and more flexible work schedules have pushed millions of workers over the edge.
Higher levels of immigration have also increased the labor supply. The number of jobs the economy could add per month in 2024 nearly doubles to between 160,000 and 200,000, according to an analysis by the Brookings Institution.
Health care and government again led payroll gains in February, while manufacturing continued to expand. Retail and transportation and warehousing, which had been in stable to negative territory in recent months, gained momentum.
No major industry lost a substantial number of jobs. Credit intermediation continued its decline – the sector, which comprises mostly commercial banking, has lost about 123,000 jobs since the beginning of 2021.
That doesn’t mean the employment outlook looks good for everyone. Employee confidence as measured by company rating website Glassdoor continues to decline as layoffs by tech and media companies make headlines. This is especially true in white-collar occupations such as human resources and consulting, while occupations that require in-person work – such as health care, construction and manufacturing – are more upbeat.
“It’s a two-track labor market,” said Aaron Terrazas, chief economist at Glassdoor, noting that it’s taking longer for people with graduate degrees to look for a job. “For skilled workers in risk-intensive industries, anyone who has been laid off is going to have a hard time finding new jobs, whereas if you are a blue-collar or frontline service worker, it is still competitive. “
The past few months have been full of strong economic data, with leading analysts surveyed by the National Association for Business Economics raising their forecasts for gross domestic product and lowering their expectations for the trajectory of unemployment. This comes as inflation has eased, leading to the Federal Reserve planning an interest rate cut sometime this year, further boosting growth expectations.
Mervyn Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas, helped tabulate the survey responses. He said the mood was partly upbeat as jitters over the federal government shutdown and drastic budget cuts eased, following several shutdown calls since the fall. And he sees no obvious reason for the recovery to end any time soon.
“Once it starts moving, it keeps moving,” Mr Jebaraj said. “You had this external stimulus with trillions of dollars of government spending, now it’s kind of self-sustaining, even though the money runs out.”
