US Job Growth Slows Down, But Unemployment Still Below 4%

The U.S job market growth shrunk in February, hit by economic as well as non-economic reasons. Nevertheless, employers maintained a strong hiring rate despite the economy’s downslide. Good news is that jobless rate also plunged to 3.9 percent in February from 4 percent in January.

On Friday, this will be the core of government’s job data when it reports the addition of 182,000 jobs in February, way down from a massive 304,000 jobs in January.

February's numbers will be the smallest since September. In December, payrolls were up by 526,000 jobs.

According to Reuters, the U.S. Labor Department’s upcoming employment report is an assertion of the explicit moderation in employment growth as an offshoot of a slowing economy.

Unlike the chill winter of February, January’s mild temperatures boosted hiring at construction and the hospitality industries.

Economists believe that the impact of stock market sell-off and surge in U.S. Treasury yields in late 2018 also hit February jobs.

The Fed data had spoken about a plunge in household wealth by a massive $3.8 trillion and the struggle of companies with dried up revenue channels.

“We are due for some payback after strong job growth over the last couple of months,” noted Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Worries of a slowing economy

The slowing economy’s growth rate in the first three months of 2019 shrunk to just 1 percent starkly down from the 2.6 percent of the October-December quarter. In 2018, the annual growth neared 3 percent, the strongest since 2015.

Chill weather conditions in February compared to the moderate temperature in the past two months looked significant.

Tighter financial conditions affected the labor market. The job data also endorsed the Federal Reserve’s logic of a “patient” approach in raising interest rates.

Economic rebound likely in April-June quarter

But economists expect a rebound in the April-June quarter, and signs are out in the form of a surge in consumer confidence in February.

The hike in applications for jobless benefits also suggested a downside to the February payrolls. The survey of the Institute for Supply Management had suggested jobs in manufacturing and service sectors have dropped in February.

“The labor market has been surprisingly strong and not consistent with the rest of the economy, because of people rejoining the labor force,” observed Sung Won Sohn, chief economist at SS Economics, Los Angeles.

The Federal Reserve also noted that only nominal gains in employment were visible in most of the U.S. central bank’s districts.