The U.S. economy created only 20,000 jobs in February

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Europe

02:01

U.S. job growth almost stalled in February, with the economy creating only 20,000 jobs amid a contraction in payrolls in construction and several other sectors, which could raise concerns about a sharp slowdown in economic activity.

The moderation in employment growth reported by the Labor Department on Friday is in line with a slowing economy that in July will mark 10 years of expansion, the longest on record. It supports the Federal Reserve's “patient” approach toward further interest rate increases this year.

While February's job growth was the weakest since September 2017, other details of the closely followed employment report were strong. The unemployment rate fell back to below four percent and annual wage growth was the best since 2009.

In addition, data for December and January was revised to show 12,000 more jobs created than previously reported.

A stock market selloff and jump in U.S. Treasury yields in late 2018 were also likely factors..

The slowdown in hiring was flagged by first-time applications for jobless benefits, which were elevated in February. Also, Institute for Supply Management surveys showed measures of manufacturing and services sectors employment dropped in the month, while the Fed on Wednesday reported “modest-to-moderate gains” in employment in a majority of the U.S. central bank's districts.

A resource fair for employees affected by the partial federal government shutdown at Seattle-Tacoma International Airport in Seattle, Washington, U.S., January 14, 2019. /VCG Photo

Though the economy grew 2.9 percent in 2018, the strongest in three years, it lost momentum as the year ended. Retail sales, homebuilding, business spending and exports all declined in December, setting the economy on a slower growth path.

Despite the weakness in hiring last month, the unemployment rate fell two-tenths of a percentage point to 3.8 percent in February as federal government workers who were temporarily unemployed during a 35-day partial shutdown returned to work. The longest shutdown in U.S. history ended on January 25.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.3 percent after hitting an 11-month high of 8.1 percent in January because of the government shutdown.

A report on Thursday showed labor costs rising only 1.4 percent in 2018, the smallest gain since 2016, after increasing 2.2 percent in 2017.

Employment at construction sites fell by 31,000, the biggest drop since December 2013, after increasing by 53,000 in January. The leisure and hospitality sector added no jobs last month.

Source(s): Reuters