• US adds 20,000 jobs in February

• Unemployment rate dropped to 3.8%

• Wage growth accelerated

• Labor market slowing but still strong

America’s job creation engine sputtered in February as US non-farm payroll (NFP) grew a measly 20k new jobs, the smallest gain since September 2017. The slowdown comes after two months of very strong hiring activity in January (revised higher from 304k to 306k) and December (revised higher from 220k to 227k). Job gains over the past three months averaged 186k.

Looking at the payrolls data by industry, the slowdown in hiring was widespread. Both goods (-32k) and services (+57k) sectors were weak, and there isn’t any one industry that stands out as the culprit. Construction shed workers (-31k), manufacturing hiring slowed (+4k), and the retail sector lost jobs (-6k). There were bright spots in some industries, including professional and business services (+42k), health care (+21k), and wholesale trade (+11k).

However, other details of the report were more positive. The unemployment rate fell back to 3.8%. It had risen to 4% in January due to workers furloughed during the government shutdown.

Another piece of good news was that the participation rate held on to January’s jump up to 63.2%. The rate is up 0.2 percentage points over the past year as a strong labor market draws in a greater share of workers.

Ending on another positive note, average hourly earnings rose a better-than-expected 0.4% on the month. On a year-on-year basis, wages were up a healthy 3.4% in February, the fastest past in almost ten years.

Source: BIMB Securities Research - 11 Mar 2019