The US economy added 379,000 jobs in February, the government said Friday. Economists were expecting just 198,000.
While certainly welcome, the blockbuster print was sure to raise additional concerns about the extent to which injecting more stimulus into the economy risks an overheat.
The anomalous swings seen during the initial lockdowns and ill-fated summer reopening push make it difficult to appreciate the magnitude of February’s jump on a visual inspection. But make no mistake, the headline print (in orange, below) marks a serious acceleration.
Additionally, January was revised markedly higher. December’s disastrous headline print was revised lower still, but January’s upward revision was 117,000, making what was a lackluster gain seem far more respectable.
The range of estimates from 76 economists for February was -35,000 to 500,000, so this was near the top-end of the range. Private payrolls rose a scorching 465,000. That was more than double the 200,000 economists expected and topped every estimate.
In news that can only be described as encouraging, employment in leisure and hospitality jumped 355,000, with the government citing “the easing of pandemic-related restrictions in some parts of the country.” Four-fifths of those jobs came in food services and drinking places.
Accommodation jobs rose 36,000 and amusements, gambling, and recreation tacked on another 33,000. Employment in leisure and hospitality remains 3.5 million jobs short of pre-pandemic levels.
Average hourly earnings printed in line both MoM and YoY. It’s likely that the steady reads there reflected the composition of February’s jobs gains. The unemployment rate moved lower to 6.2%, a tick below the 6.3% economists expected.
The latest comprehensive read on the labor market comes as Democrats rush to beat the clock on a fresh round of measures aimed at bolstering the recovery. Key federal benefits for the jobless are set to lapse later this month in the absence of a new stimulus package. The Senate is expected to clear a version of Joe Biden’s $1.9 trillion proposal within days. Once the House passes the modified bill, it will head to the President’s desk.
February’s jobs report suggests the labor market is in better shape than some feared, but even with February’s gains (and January’s revisions) it remains a concern, down some 9.5 million jobs from levels seen prior to the public health crisis.
A pickup in retail sales and PMI surveys suggest the US economy is heating up. Supply chain constraints are colliding with pent-up demand and lingering pandemic effects to push up input prices in both the manufacturing and services sectors. Some worry additional stimulus risks overheating the economy, even as millions who were employed this time last year remain out of work. February payrolls will likely give those critics additional ammunition. Weekly jobless claims, though, remain stuck well above pre-pandemic record highs.
Last month, BofA called robust January retail sales data an “absolute game-changer.” The bank’s Michael Hartnett cited a hot early-1994 nonfarm payrolls report as a possible historical analog.
That “ended [the] early-90s ‘jobless recovery,’ incited Fed rate hikes, and [a] bond bear which ended with [the] Orange County and Mexico busts,” Hartnett wrote, on February 18.