Despite growing risks posed by the coronavirus outbreak, the ever-expanding U.S. economy flexed its muscle with another strong jobs report last month, adding 273,000 nonfarm jobs in February.
The number, reported Friday by the U.S. Bureau of Labor Statistics, was the largest monthly increase since May 2018 and easily eclipsed the 165,000 to 175,000 employment additions expected by economists. Likewise, the unemployment rate continued to impress, further retreating to 3.5% and matching its lowest level in more than 50 years.
Sizable employment gains were seen in healthcare and social assistance, which added 57,000 jobs, and food services, which posted another 53,000 additions. Government employment saw a prominent gain of 45,000 jobs, including 7,000 temporary workers for the 2020 Census.
Even the dormant manufacturing sector saw signs of waking, adding 15,000 new jobs. Notably, for the housing market, construction jobs increased as well with 42,000 additions, about triple the pace of monthly hiring in 2019. Residential construction gained 10,000 new workers as homebuilders continued to benefit from both historically low mortgage rates and an unseasonably warm winter.
The job-addition totals from the previous two months also were bumped upward. Employment-growth numbers from this past December moved from 147,000 to 184,000, while January 2020 job gains rose from 225,000 to 273,000.
Wage growth dwindled slightly, ebbing from 3.1% in January to 3% in February, although the rate remains in line with economist forecasts.
Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association (MBA), called the stronger-than-expected gains “great news for the housing market.”
“Strong job growth, coupled with a faster pace of home construction and record low mortgage rates, sets us up for a very active spring market. … The purchase-application data in MBA’s Weekly Applications Survey will be a great barometer of future homebuyer demand, as activity last week was already 10% higher than a year ago,” Fratantoni said.
Odeta Kushi, deputy chief economist for First American Financial Corp., noted that continued gains in residential construction should spell good news for the nation’s still-low supply of for-sale homes.
“The growth in residential construction jobs supports further improvement in the pace of homebuilding, because building a home does not readily lend itself to outsourcing and automation,” she said. “It’s very hard to increase housing starts without increasing residential construction employment and productivity.”
Of course, the strength of the labor market at the start of 2020 — and any ensuing effects it would have on housing activity this year — is likely to be tested by a potentially significant headwind in the ongoing COVID-19 outbreak. Fratantoni called uncertainty around the coronavirus’ impact the “caveat” to a potentially busy spring buying season.
After ADP and Moody’s Analytics released their own February 2020 employment report earlier in the week, Moody’s chief economist Mark Zandi said that “COVID-19 will need to break through the job-market firewall if it is to do significant damage to the economy.”
“The firewall has some cracks, but judging by the February employment gain, it should be strong enough to weather most scenarios,” he said.
But as the outbreak grows, Zandi expressed further concern that the economic risks of the coronavirus are substantial.
“If the CDC (Centers for Disease Control), the World Health Organization and other health experts are correct, it will become a global pandemic that engulfs much of the world, including us here in the United States,” Zandi said in a video posted Friday by Moody’s Analytics on Twitter. “If that’s the case, a recession will be difficult to avoid.
“The difference between an economy that’s diminished by this and … [one] that doesn’t go into recession is going to be about confidence,” he added. “Will businesses and consumers hang tough here and not lose faith that they’ll be able to navigate through?”