March 8, 2019 / 2:06 PM / 8 months ago

Instant View: U.S. February job growth stalls but wage gains strong

(Reuters) - 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.

People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson


* Total payrolls rose 20,000 vs 180,000 estimate and upwardly revised 311,000 prior (original 304,000)* Private payrolls rose 25,000 vs 170,000 estimate and upwardly revised 308,000 prior (original 296,000)

* Unemployment rate drops to 3.8 pct vs 3.9 pct estimate and 4.0 pct prior

* Average hourly earnings rise 0.4 pct month-to-month vs 0.3 pct estimate and unrevised 0.1 pct prior

* Average hourly earnings rise 3.4 pct year-over-year vs 3.3 pct estimate and downwardly revised 3.1 pct prior (original 3.2 pct)

* U-6 rate drops to 7.3 pct vs 8.1 pct prior; the 0.8 percentage point drop is the largest in series history* Labor force participation unchanged at 63.2 pct

* Household survey: Workforce contracted by 45,000; employed by rose by 255,000; unemployed fell by 300,000


STOCKS: S&P e-mini futures add to earlier losses, pointing to a sharp drop at the Wall Street open

BONDS: 2- and 10-year Treasury yields little changed after an initial move lower

FOREX: The dollar index extends session losses

RATE FUTURES: Fed funds contract for January 2020 adds to earlier gains; implied yield 2.34 pct vs current fed funds effective rate of 2.40 pct



“We need one more month without a government shutdown involved in it to really make sense of these numbers. You put last month and this month together, OK, the 3-month average is 186,000 jobs, a pretty healthy economy. But the volatility of the numbers is kind of ridiculous.

“The fact we say there is 300,000 more people employed so the unemployment rate is down, well those are government workers who just went back to work. I do think some of this is weather related. We had some really bad weather in a lot of the country and you see construction jobs down, you see hospitality and leisure flat, which makes me wonder if we didn’t have some sort of weather factor involved there. Because the areas we have been creating jobs – professional and business services, healthcare, you continued to see solid numbers.

“You look at the headline and then you dig under the numbers and you say some of this doesn’t make sense, let’s look at the 3-month average because that is more of a stable number. And if you look at that you are off a little bit, then everyone is going to turn back and say let’s look at China and what happened there last night. Bad exports and the ambassador saying we are not as close as we thought, and that is really the story of the day.”

“I don’t think this number changes the Fed’s view one way or the other.”


“In spite of the big miss in the headline number, some elements were better than expected. Unemployment fell, U-6 might have had the biggest drop on record. And we saw better-than-expected earnings.

“We’ve seen similarly low levels before. May 2016 was 15,000. September 2017 was 18,000. So if it’s a one-off month of weak job growth and we return to that 200,000 level, there will be a willingness to look through this read.

“There’s a decent chance that Q1 U.S. GDP comes in less than 1 percent. Growth is stalling, Q1 is going to be really nasty and there’s increasing skepticism that even a trade deal will turn the tide.”

“Is the dovish Fed and the dovish move from the ECB enough to make this a one-off quarter before growth reasserts itself? Or are we starting to enter the end game of this cycle.”

“Treasury yield moves speak to a willingness to look through this. We need to see this not snap back in March for it to be seen as more than a one-off bad month.”


    “Overall, I don’t think the bond market is reacting panicky as far as this is just a terrible number, and I think stocks were down already and think they were down more on trade than this number.”


“The poor number indicates that we are suffering alongside the rest of the global economy and that it is having an impact on the U.S.”

“The U.S. has been the best house in a lousy neighborhood and maybe that is changing.”


“Boy, 20,000, what a shocker. It is awful.”

“We had a blowout number in January, so this is almost compensating for that. We’re going to have more in the way of bumpy jobs reports going forward where we might see some exceeding expectations and some really underwhelming, and this obviously was a giant underwhelm, but it follows a big overwhelm.”

“Markets have been put on alert by central bank action and particular what we’ve seen is a pretty dramatic change of heart by first the Fed, then the Bank of Canada and then finally the European Central Bank. Those changes in policy stance have begged the question: What do the central bankers see that we don’t see that may be causing them concern? This anemic jobs report is only going to add to concerns about a global slowdown.”

“Upcoming data is going to be all the more important given that we’ve gotten so many mixed signals on global as well as U.S. growth. This is an environment where the Fed has reconfirmed that it is data dependent, so data is going to take on more importance going forward.”

Americas Economics and Markets Desk; +1-646 223-6300

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