Economics

Smooth Sailing Before the Storm

The U.S. economy looks strong before coronavirus impacts hit

Robert Spendlove and Drew Maggelet Mar 6, 2020

The United States labor market continued to show strength in February, but with caveats. While the U.S. added 273,000 jobs and the unemployment rate decreased slightly, from 3.6 percent in January to 3.5 percent, the data was collected the week of February 12, before the coronavirus began to impact the U.S. economy. The labor force participation rate was unchanged from its recent high of 63.4 percent. Wage growth decreased slightly, from 3.1 percent in January to 3.0 percent in February.

jobs graph for feb 2020

Top Takeaways from the Report

Flashback Friday
While the numbers in the jobs report indicated a strong economy, the survey was conducted the week of February 12, before the coronavirus impact started to be seen. The good news is that the data showed a strong economy at that point. The bad news is that this is likely to be the best jobs report for a while as the economy takes a hit from coronavirus.

Job Growth in February was Once Again Much Higher Than Expected
Job growth greatly exceeded expectations again in February. The consensus forecast for job growth was 177,000. The actual number of 273,000 shows the economy was still growing at a good clip in early February.

Labor Market Indicators Remained Strong
While unemployment dipped to 3.5 percent in February from 3.6 percent in January, the labor
force participation rate remained at the highest rate since 2013 at 63.4 percent.
Underemployment ticked up to 7.0 percent.

Growth by Industry

The construction sector continued strong growth in February, adding 42,000 jobs. The sector is experiencing a massive increase in 2020, with an average of 45,500 jobs added per month versus an average of 13,000 jobs added in 2019.

Health care employment growth was strong in February, adding 32,000 jobs. Physicians and home health care services contributed the most to the sector, adding 10,000 new jobs each. The February number is not too far off of the 2019 average of 29,000 jobs added per month.

Although the number of jobs in the mining and natural resources sector added 4,000 jobs in February, jobs in the industry have declined by 3.2 percent over the last year. This was the only major industry to lose jobs year-over-year.

The Manufacturing industry looked a little stronger, with employment in the industry increasing by 15,000 jobs in February. Although manufacturing employment growth remains negative overall in the months since December, manufacturing has still added jobs year-over-year.

The Bottom Line

The February jobs report is likely to become a benchmark for the U.S. economy as the impacts of the coronavirus become more evident. Employment growth in affected sectors like transportation, manufacturing, healthcare, financial services and accommodation were still doing well when the data was collected, but have since shown signs of significant change as the coronavirus comes to the U.S. It seems likely we will not begin to know the true economic impact of the coronavirus until more data is released later this month.

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The division of Economics and Public Policy at Zions Bank informs and educates employees, clients, and the community-at-large by providing insight and analysis on issues related to local, national and global economic trends as well as federal banking policies. The primary goal of the Economic and Public Policy team is to help individuals and businesses understand important issues that can impact their daily financial decisions. For more information and analysis, please visit www.zionsbank.com/economy.

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