• Employment up 273,000 in February

• The unemployment rate falls back to 50-year low of 3.5%

• Wage growth strengthened to 0.3% mom but down to 3.0% yoy

• Labor force participation rate held up to 63.4%

• Coronavirus spread could halt robust US job gains

Nonfarm payrolls grew far more than expected in February as companies continued to hire leading into a growing coronavirus scare. The US labour market was on solid footing through the first two months of the year with back-to-back payroll gains of 273,000. That represents the best two-month increase in two years. To top it off the previous two months were revised up 85,000. The government raised the increase in new jobs in January to 273,000 from 225,000. December’s gain was lifted to 184,000 from 145,000. Over the past three months it has accelerated to 243,000 jobs, an extremely high number so deep into an economic expansion.

Health-care providers led the way in hiring by adding 57,000 jobs. The industry has been one of the fastest growing for years in large part due to an aging population. Restaurants and bars filled 53,000 positions and government employment rose by 45,000, including 7,000 temporary Census workers. The federal government is expected to add up to 500,000 temporary workers for the 2020 Census and hiring is already underway. Construction companies boosted employment by 42,000 in January to mark the second straight big increase. Manufacturers also added 15,000 jobs. Employment fell slightly among retailers and transportation companies. The unemployment rate mirrored this strong result, falling a tick to 3.5%.

The unemployment rate has been oscillating between 3.5-3.6% over the past six months. The participation rate held up at 63.4%, unchanged from January. Average hourly earnings accelerated in February, up 0.3% on the month, or 3.0% on a year-on-year basis.

Source: BIMB Securities Research - 9 Mar 2020