U.S. Added 273,000 Jobs Last Month, But Economists Brace For Coronavirus Impact | KERA News

U.S. Added 273,000 Jobs Last Month, But Economists Brace For Coronavirus Impact

Mar 6, 2020
Originally published on March 6, 2020 10:19 am

Updated at 10:31 a.m. ET

Fear of the coronavirus doesn't appear to have infected the U.S. job market yet, despite sending shivers through Wall Street.

A new report from the Labor Department says employers added 273,000 jobs in February — the same as in January. The February increase was about 100,000 more than private analysts had forecast. The unemployment rate dipped to 3.5%, matching a 50-year low.

Job gains for December and January were revised up by a total of 85,000.

The evident resilience in the jobs report may be an artifact of timing. The report is based on surveys conducted three weeks ago, before the sharp jump in reports of coronavirus cases outside of China, where the outbreak began.

"The February jobs report showed remarkably healthy labor market fundamentals prior to the coronavirus outbreak," said Gregory Daco of Oxford Economics. "But while strong employment and steady wage gains have boosted consumers' immune system, the virus is all but certain to infect their willingness to spend."

He warned that business and consumer caution about the virus is likely to weigh on job growth in the months to come.

The pace of hiring in February was higher than the previous three months, in which employers added an average of 239,000 jobs. But there was little sign of the coronavirus contagion that's triggered a widespread selloff in the stock market.

The Dow Jones Industrial Average dropped nearly 970 points on Thursday and was down about 500 points Friday morning. The blue chip index has fallen about 13% from its peak in early February. The S&P 500 index and the Nasdaq have each tumbled more than 10% from their recent highs. Futures markets point to further declines on Friday.

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U.S. construction companies continued to expand in February, adding 42,000 workers. Construction has gotten a boost in recent months from higher-than-usual temperatures and lower-than-usual interest rates. The rate on an average, 30-year mortgage fell to an all-time low this week: 3.29%.

The hospitality business has been growing rapidly, adding tens of thousands of jobs in recent months, and that trend continued in February with 51,000 new jobs. That growth could slow, however, as fear about the spreading coronavirus discourages travel and tourism.

The retail, transportation and warehouse industries showed modest job declines in February.

Manufacturers, who are especially sensitive to global shocks like coronavirus, added 15,000 jobs in February after cutting a revised 20,000 jobs the month before.

A survey of manufacturers released earlier this week showed factory activity expanded in February, albeit slowly. Many of the survey respondents said the coronavirus outbreak is playing havoc with their suppliers in China.

Analysts warn that a shortage of parts from that country is likely to get worse before it gets better. While Chinese factories that were shuttered by the outbreak have begun to reopen, most are not operating anywhere close to capacity.

"Some of the delays caused by this [will] only materialize as that works its way through the supply chain," said Shawn DuBravac, chief economist for IPC, an association of electronics manufacturers. "It could be April and May when we actually see some of that delay materialize."

Governments added 45,000 workers in February. About 7,000 of those were temporary census employees, but the largest share were state educators.

The share of American adults who are working or looking for work was unchanged last month.

Average wages have increased 3% over the past year, a slight deceleration from the previous month.

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RACHEL MARTIN, HOST:

Fear surrounding the coronavirus does not appear to have infected the U.S. job market, at least according to the latest numbers from the Labor Department. The department's monthly employment report shows stronger than expected job gains in February. U.S. employers added 273,000 jobs. And the unemployment rate dipped to 3 1/2 percent, matching a 50-year low. The good news, the good job news brought a little good news to the stock market, which continues its downward slide this morning. To help us understand why, we've got NPR's Scott Horsley in studio. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Rachel.

MARTIN: So how come? Why aren't investors happy about the fact that the economy has added more than a quarter million jobs in February?

HORSLEY: It is certainly good news for the people who got those jobs. But this report was out of date even before it was published this morning. It's based on surveys that were done three weeks ago. And that was before we saw the spike in coronavirus cases outside of China, where the epidemic began. It was that spike that really forced investors to reassess how much damage they think the epidemic is going to do to the U.S. economy and the global economy. And today's report just doesn't account for that. You know, we always say the jobs report is kind of a snapshot in time. In this case, the snapshot is a little yellow and faded. And it's just capturing a world that looks very different than the one we're seeing three weeks later.

MARTIN: Yellow and faded. But still, I mean, the snapshot says 273,000 jobs, which in an ordinary month would just be huge, right?

HORSLEY: Absolutely. It's about 100,000 more than forecasters were expecting. February was another good month for construction. Construction companies added about 42,000 jobs. Homebuilders in particular have been helped by higher-than-usual temperatures this time of year and lower-than-usual interest rates. The average rate on a 30-year fixed mortgage fell this week to an all-time low. We also saw job gains in health care and hospitality. Even manufacturing got a bit of a boost in February, with 15,000 new factory jobs after factories cut 20,000 the month before.

MARTIN: So there's a time lag in accounting for the coronavirus. But as we look forward, I mean, could the coronavirus eat into those gains you just outlined?

HORSLEY: We don't know for sure. But markets are certainly signaling real concern about that kind of fallout, you know, if people get sick or if they're quarantined to avoid getting sick or if they simply change their behavior because they're nervous about getting sick.

MARTIN: Yeah.

HORSLEY: Manufacturers have already reported some challenges in getting the parts and supplies they need from China because, of course, factories in that country were shut down for weeks and are only just beginning to reopen and ramp back up. Dockworkers on the West Coast have seen a big decline in the number of cargo containers coming in from China.

This week, airlines began reporting a steep drop in traffic. Tourism is expected to suffer. It is possible that consumers will be less eager to go out to bars and restaurants or go shopping if they're nervous about coronavirus. So all of that has the potential to weigh on the economy and the job market in the months to come.

MARTIN: So earlier this week, the Federal Reserve cut interest rates by half a percentage point to try to prop up the economy. And this doesn't seem to have reassured investors. So what are the other tools that the government has at its disposal here?

HORSLEY: Well, you're right. The Fed's action has not stopped the market slide. Just this morning, the Dow is down more than 400 points. There's some expectation the Fed will order another rate cut when it meets in a couple weeks. But rate cuts take a long time to work their way into the economy. So some are calling for Congress to take speedier action.

Jason Furman, a former White House economist in the Obama administration, wrote an op-ed for The Wall Street Journal, where he said the government should just send $1,000 to every man and woman and $500 to every kid to cushion the coronavirus shock. So far, the Trump administration is not pushing for that kind of fiscal stimulus, but it could in the weeks to come.

MARTIN: All right. NPR economics correspondent Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.