If the economy slows down, no one tells the labor market.
Employers added 275,000 jobs in February, the Labor Department reported Friday, in another month that beat expectations.
That was the third straight month of gains of more than 200,000, and the 38th consecutive month of growth — fresh evidence that after recovering from pandemic shutdowns, America’s jobs engine still has plenty of steam. .
“We were expecting a slowdown in the labor market, a more material easing of conditions, but we just don’t see that,” said Rubeela Farooqi, chief economist at High Frequency Economics.
The previous two months, December and January, changed by a combined 167,000 jobs, reflecting the higher level of statistical volatility in the winter months. That doesn’t detract from a picture of a consistently steady rise, which now looks slightly smoother.
At the same time, the unemployment rate, based on a survey of households, rose to a two-year high of 3.9 percent, up from 3.7 percent in January. A broader measure of loose labor market conditions, which includes people working part time who prefer to work full time, continues to rise and now stands at 7.3 percent.
The unemployment rate is driven by people who lose or leave their jobs as well as those who enter the labor force to find work. The labor force participation rate for people in their prime working years — ages 25 to 54 — jumped back up to 83.5 percent, matching a level from last year that was the highest since the early 2000s.
Average hourly earnings rose 4.3 percent over the year, though the pace of increases is slowing.
“We’ve recently seen gains in real wages, and that’s encouraging people to re-enter the labor market, and that’s a good development for workers,” said Kory Kantenga, a senior economist at the website of LinkedIn job search. As wage growth slows, he said, the likelihood that more people will start looking for work decreases.
Last fall, economists were forecasting a more modest job increase, with hiring concentrated in a few industries. But while some pandemic-grown industries have lost jobs, the expected downturn in sectors such as construction has not materialized. Rising wages, attractive benefits and more flexible work schedules have alienated millions of workers.
High levels of immigration also increased the supply of labor. According to a analysis by the Brookings Institutionthe outflow roughly doubled the number of jobs the economy could add each month in 2024 without putting upward pressure on inflation, to between 160,000 and 200,000.
Health care and government payrolls again led in February, while construction continued its steady rise. Retail and transportation and warehousing, which had been negative in recent months, picked up.
No major industries lost large numbers of jobs. Credit intermediation continued to decline — that sector, which mostly includes commercial banking, has lost about 123,000 jobs since early 2021.
That doesn’t mean the job landscape looks bleak at all. Employee confidence, count as measured by company rating website Glassdoor, continues to fall as layoffs by tech and media companies grab headlines. That’s especially true in white-collar professions such as human resources and consulting, while those in professions that require personal work — such as health care, construction and manufacturing — are more dynamic.
“It’s a two-track labor market,” said Aaron Terrazas, Glassdoor’s chief economist, quoted earlier job search takes longer for people with graduate degrees. “For skilled workers in high-risk industries, anyone who gets laid off has a hard time finding new jobs, whereas if you’re a blue-collar or frontline service worker, it’s still competitive.”
The last few months have been underpinned by strong economic data, leading the way analyzed by analysts of the National Association for Business Economics to raise their forecasts for gross domestic product and lower their expectations for the trajectory of unemployment. This came even as inflation eased, leading the Federal Reserve to telegraph its plans for interest rate cuts sometime this year, raising growth expectations.
Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas, helped tabulate the survey responses. He said the mood was partly buoyed by fading fears of federal government shutdowns and draconian budget cuts, after several close calls since the fall. And he sees no clear reason for the recovery to end.
“Once it starts, it keeps going,” Mr. Jebaraj said. “You’ve got this external stimulus with all the trillions of dollars of government spending, Now it’s kind of self-reinforcing, even though the money’s gone.”
