February jobs report: U.S. economy adds better than expected 273,000 payrolls, unemployment rate falls back to 50-year low

The February jobs report reflected much better than expected job gains and an unemployment rate back at a 50-year low, before the coronavirus outbreak escalated and threatened to weigh on economic activity.

The Labor Department released its February jobs report at 8:30 a.m. ET Friday. Here were the main results from the report, compared to consensus expectations compiled by Bloomberg:

  • Change in non-farm payrolls: +273,000 vs. +175,000 expected

  • Unemployment rate: 3.5% vs. 3.6% expected

  • Average hourly earnings, month on month: +0.3% vs. +0.3% expected

  • Average hourly earnings, year on year: 3.0% vs. +3.0% expected

The pace of job gains was expected to slow in February relative to January, when the economy added a surging 225,000 non-farm payrolls, before revisions, as unseasonably warm weather supported hiring.

The February jobs report, however, reflected the state of the labor market before the coronavirus outbreak broadened out. The reference week for the Labor Department’s household survey, which includes the unemployment rate, takes place during the week of the 12th of the month, while the establishment survey tracking non-farm payroll changes measures the pay period including the 12th.

The first known deaths linked to the coronavirus in the U.S. took place last week. The number of new confirmed cases in the U.S. began to accelerate beginning in late February, coinciding with a rise in global new cases and sparking fears of a pandemic that would dent company supply chains, consumer demand, and ultimately threatened to stunt economic growth worldwide.

So far, domestic economic data reports have mentioned the coronavirus mostly as an impending downside risk, with impacts from the outbreak yet to meaningfully appear. The February jobs data is set to be another backward-looking report.

“In the midst of a news cycle where one hour feels like an entire day, release of the February employment report brings an opportunity for something of a virtual nostalgic throwback,” Mark Hamrick, senior economist analyst for Bankrate, said in an email. “It cannot yet reflect the full potential economic impacts still to come from the coronavirus outbreak or the recent sharp selloff in the stock market.”

The report, however, reaffirmed the U.S. economy’s momentum at the start of the year, in absence of the outbreak. In its Beige Book released Wednesday, the Federal Reserve characterized economic activity through February 24 as expanding at a “modest to moderate rate over the past several weeks,” with employment increasing “at a slight to moderate pace, overall, with hiring constrained by a tight labor market.”

Ahead of the official February jobs report, other reports also underscored the strength of the U.S. labor market at the start of the year. ADP/Moody’s reported Wednesday that private payrolls increased by 183,000 in February, retreating slightly after January’s gain of 209,000 but topping consensus economist expectations.

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