The US economy added 273,000 jobs in February, far more than expected, and the unemployment rate returned to a 50-year low in a sign of strength in the world’s largest economy as the coronavirus began to spread in the country.
The increase last month, according to data on Friday from the US labour department, matched January’s figure, which was revised higher to 273,000 from 225,000. That is the fastest rate of job growth since May 2018. Economists forecast a gain of 175,000 in February.
Additionally, December’s figure was revised higher by 37,000 to a gain of 184,000 jobs, meaning that the US economy was in solid shape before the number of coronavirus cases nationally and internationally began to take off.
The unemployment rate eased back to 3.5 per cent, a 50-year low, having ticked up slightly last month. Economists expected it to remain steady at January’s rate of 3.6 per cent.
Health care, social assistance and food services and bars led job gains last month, the Bureau of Labor Statistics said in a statement.
Mohamed El-Erian, the chief economic adviser at Allianz, said: “The good news, a strong US labour market, especially when it comes to job creation and wage growth. The bad news, when it comes to looking forward, this tells us more about what could have been rather than what will be.”
Wage growth picked up to 0.3 per cent in February, the biggest monthly rise since November. That was in line with market expectations, and up from 0.2 per cent in January. The annual pace of average earnings growth slowed to 3 per cent, from 3.1 per cent a month earlier.
Futures for the S&P 500 were down 2.7 per cent shortly after the release, having tipped a decline of more than 3 per cent ahead of the data.
The yield on the benchmark 10-year US Treasury sat 19 basis points lower at 0.737 per cent. Expectations the Federal Reserve will cut rates at its regular policy meeting in less than a fortnight, after cutting them by half a percentage point at an emergency meeting on Tuesday, pushed the yield on the benchmark 10-year Treasury below 0.7 per cent for the first time earlier on Friday.
Brian Coulton, chief economist at Fitch Ratings, said another strong jobs report underscored the resilience of the US services sector, “at least until February”.
“The fallout from China’s sharp downturn and the changes in US firms and households behavior in response to the Covid-19 outbreak – including reduced travel – will doubtless take a toll on service sector and broader US economic activity from March. But it comes against the backdrop of steady growth in the non-manufacturing sector and a tight labor market, supporting consumption,” he said.
Additional reporting by Jennifer Ablan in New York