February Jobs Report Sends Mixed Signals About State of the Economy

“Don’t hit panic button.”

US employers added just 20,000 workers to payrolls in February according to numbers released by the US Department of Labor Friday.

Following strong jobs gains averaging 225,000 over the past year, the modest increase was well short of the 181,000 economists predicted. But the unemployment rate fell to 3.8 percent, down from 4 percent in January, nearing the 50-year low of 3.7 percent reached in November.

While the sharp decline in growth may seem like a concerning sign on the surface, many economists have indicated that one month of slow growth isn’t a cause for alarm.

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Dean Baker of the Center for Economic and Policy Research said Friday that the slow down was likely due to the “extraordinary rapid growth in January.”

#JobsReport job growth plunges in February. Don't hit panic button, likely due to extraordinary rapid growth in January

— Dean Baker (@DeanBaker13) March 8, 2019

Echoing some of that optimism, Joe Brusuelas of major accounting firm RSM US, argued that strong wage gains were a “silver lining” to the otherwise “cloudy report.”

Strong monthly gain of 0.4% in wages which brings the 3 month average annualized pace to 3.3 percent. That is the silver lining in an otherwise cloudy report.

— Joseph Brusuelas (@joebrusuelas) March 8, 2019

Before his trip to Alabama Friday morning, President Trump touted strong wage growth as a reason for optimism about the economy.

“Wages are going up for the first time in many years” Trump told reporters before boarding Marine One.

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Trump also remarked on the report via Twitter, noting that the “women’s unemployment rate is down to 3.6%,” from “7.9% in January, 2011.”

Women’s unemployment rate is down to 3.6% – was 7.9% in January, 2011. Things are looking good!

— Donald J. Trump (@realDonaldTrump) March 8, 2019

A strong economy in 2018 caused US labor markets to tighten, forcing employers to raise wages in order to hire. Economists predict job growth will slow in 2019 as the unemployment rates hover around full employment and the labor force participation rate continues to improve.

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