The U.S. labour market may not be as weak as February’s payrolls number suggested, but the report provides a reality check that a long-forecast slowdown is arriving south of the border.
Employers stateside added 20,000 jobs during the month, the fewest since September 2017, missing all economist estimates and bucking a recent trend of strong February readings. Analysts said the disappointingly low figure doesn’t mean conditions rapidly deteriorated -- citing weather effects and payback from outsize gains in prior months -- but they pointed to the likelihood of a moderation in job gains this year as economic growth cools.
While the payroll gains were not as good as expected, the report’s other highlights were largely positive: the unemployment rate declined by more than forecast and hourly wages rose from a year earlier at the fastest pace since the economic crisis began in 2009, figures that bode well for consumer spending. Some industries hit hard in February are typically closely tied to weather patterns, including construction and retail, while the lingering effects of the partial government shutdown may have created some volatility.
Economists were already expecting monthly payroll gains to average about 170,000 this year, following a 223,000 pace in 2018 that was driven by corporate investment and consumer demand fueled by tax cuts. The effects of fiscal stimulus, including hikes in government spending, are expected to fade while President Donald Trump’s trade war with China continues to provide a cloud ove businesses.
