The February 2019 Employment Situation released by the Bureau of Labor Statistics (BLS) on Friday showed that hiring slowed sharply for the month with only 20,000 new jobs, compared to the 181,000 jobs that economists expected to be added in February. That is the fewest job gains since September 2017, when major hurricanes affected employment, and a sharp decline from December's gains of 227,000, and January with 311,000.
According to the Labor Department, the unemployment rate fell to 3.8 percent from 4 percent, The partial government shutdown added fuel to the jobless rate in January because many federal government employees were unemployed or on temporary leave, but an offsetting drop was expected as those workers returned. Economists were looking for a slowdown in payroll growth last month after gains in January that were inflated by unusually mild weather, meanwhile, above-average snowfall in mid-February was set to reduce total employment by an estimated 40,000.
Employment in construction declined by 31,000 in February, partially offsetting an increase of 53,000 in January. But over the year, construction has added 223,000 jobs. Regardless of the plummet in February, economists expect a rebound in the April-June quarter, and there are already signs due to the rise in consumer confidence. More Americans signed contracts to buy homes in January, propelled by lower mortgage rates, and analysts have forecast that annual growth will top 2 percent next quarter.
Weighing in on the report, Doug Duncan, Chief Economist at Fannie Mae, said “We expect the Fed to raise rates only once more this year, in June, before pausing. Meanwhile, in the residential construction sector, a weather-sensitive industry, the number of jobs fell in February. However, the sharp increase in housing starts and continued improvements in builder sentiment suggest that this month’s decline does not signal a continuation of weakness in the industry.”
U.S. Secretary of Labor Alexander Acosta issued a statement saying "At 3.4% year-over-year, wage gains hit their highest mark since April 2009. The year-over-year average hourly earnings growth surpassing 3.0% for the seventh straight month is good news for America's workers.
Further, Duncan stated, “Although the labor force participation rate held steady in February, the rate for those aged between 16 and 64 rose to its highest level since May 2010. Amid mixed signals from the labor market, well-contained inflation, and the dovish shift by the ECB, we believe the Fed is likely to remain patient.”
Read the full report here.