If the economy is slowing, no one told the labor market.
Employers added 275,000 jobs in February, the Labor Department reported Friday, in another month that beat expectations.
It was the third straight month of gains above 200,000 and the 38th straight month of growth — new evidence that after recovering from pandemic shutdowns, America’s jobs engine still has plenty of steam.
“We were expecting a slowdown in the labor market, a further material easing of conditions, but we’re just not seeing that,” said Rubeela Farooqi, chief economist at High Frequency Economics.
The previous two months, December and January, were revised downward by a total of 167,000 jobs, reflecting the greater degree of statistical volatility in the winter months. That does not alter a picture of solid and consistent increases, which now seems a little softer.
At the same time, the unemployment rate, based on a household survey, rose to a two-year high of 3.9 percent, from 3.7 percent in January. A broader measure of labor market slack conditions, which includes people who work part-time and prefer to work full-time, has been steadily increasing and now stands at 7.3 percent.
The unemployment rate was driven by people who lost or left their jobs, as well as those who entered the labor force to look for work. The labor force participation rate for people in their prime working years (ages 25 to 54) jumped again to 83.5 percent, matching a level last year that was the highest since the early 1990s. 2000.
Average hourly earnings increased 4.3 percent over the year, although the pace of increase has been slowing.
“We’ve seen increases in real wages recently, and that has encouraged people to re-enter the labor market, and that’s a good development for workers,” said Kory Kantenga, senior economist at job search website LinkedIn. As wage growth slows, he said, the likelihood that more people will start looking for work decreases.
As late as last fall, economists were predicting much more modest job gains, with hiring concentrated in a few industries. But while some pandemic-bloated industries have shed jobs, expected slowdowns in sectors such as construction have not materialized. Rising wages, attractive benefits and more flexible work schedules have pushed millions of workers out of banking.
High levels of immigration have also increased labor supply. According to a Brookings Institution analysisThe influx has roughly doubled the number of jobs the economy could add per month in 2024 without putting upward pressure on inflation, to between 160,000 and 200,000.
Healthcare and government again led payroll increases in February, while construction continued its steady rise. Retail, transportation and warehousing, which have been flat to negative in recent months, rebounded.
No major industry lost a substantial number of jobs. Credit intermediation continued its decline: that sector, which mainly includes commercial banking, has lost around 123,000 jobs since the beginning of 2021.
That doesn’t mean the job outlook looks promising for everyone. Employee trust, such as measured by company rating website Glassdoor, has been falling steadily as layoffs by technology and media companies have grabbed headlines. This is especially true in white-collar professions like human resources and consulting, while those in professions that require working in person (like healthcare, construction, and manufacturing) are more optimistic.
“It’s a two-way labor market,” said Aaron Terrazas, chief economist at Glassdoor, noting that job searches are taking longer for people with graduate degrees. “For skilled workers in high-risk industries, anyone who’s been laid off is struggling to find new jobs, while if you’re a blue-collar or front-line service worker, it’s still competitive.”
The last few months have been filled with strong economic data, leading surveyed analysts by the National Association of Business Economics to raise its forecasts for gross domestic product and lower its expectations for the trajectory of unemployment. It has occurred even as inflation has eased, prompting the Federal Reserve to announce plans for interest rate cuts sometime this year, further raising growth expectations.
Mervin Jebaraj, director of the Center for Economics and Business Research at the University of Arkansas, helped tabulate survey responses. He said the mood was buoyed in part by waning unease over federal government shutdowns and draconian budget cuts, after several tough times since the fall. And he sees no obvious reason for the recovery to end soon.
“Once it starts working, it keeps going,” Jebaraj said. “You had this external stimulus with all the trillions of dollars of government spending. Now it’s kind of self-sustaining, even though the money has run out.”
