Stockholm (Ekonamik) – According to figures published by the US Bureau of Labour Statistics (BLS), the US economy added 20,000 jobs in February 2019, the smallest increase in employment since November 2017.
The services sector provided most of the subdued growth in February, driven by hirings in financial activities, professional and business services, and education and health services industries. Mining and logging, construction, wholesale and retail trade as well as transportation and housing were negative net contributors to the labour market. The net increase in non-farm payrolls represents a 94% fall from the 300,000 jobs created in the previous month. However, jobs growth is a noisy measure. Monthly decreases such as these were also observed in November 2004, September 2005 and May 2016, without signalling an imminent economic slowdown.
The same report also announced the unemployment rate was down to 3.8%. This level of unemployment is within ten basis points of the minimum unemployment rate since 1999, which was last observed in November 2018. The fact that the US unemployment rate has fluctuated within a stable band of 3.7% – 4% since March 2018 might suggest that it has bottomed out.
Thomas Costerg CFA, Senior Economist at Pictet Wealth Management, added some colour to these figures. “Some details of the report reinforce the view that it is too early to conclude that this marks a sharp cyclical turning point in the economy. Employment in temporary help services was up on the month (+6,000) and up 2.2% year-on-year (y-o-y). This is an important positive bellwether, in our view. Meanwhile, wage growth was stronger than expected at 3.4% y-o-y. From a medium-term business cycle perspective, this is an ‘amber light’, since it demonstrates that the US business cycle is gradually entering a ‘late cycle’ phase, with higher recession risks.”
Photo by Department of Labor|Shawn T Moore