Economy adds just 20K jobs in February, far below expectations

The U.S. economy added 20,000 jobs in February, the Labor Department reported Friday, far below analysts’ expectations that the country would gain 180,000 jobs.

The unemployment rate dropped 0.2 percentage points to 3.8 percent as the labor force participation rate held steady at 63.2 percent. Hourly earnings also increased 3.4 percent in the past 12 months, beating expectations.

{mosads}The underwhelming February numbers follow a stellar January jobs report, which was revised upward Thursday from 304,000 to 311,000 jobs.

Hiring was expected to drop slightly in February following 100 consecutive months of job gains and a slight slowdown in U.S. gross domestic product growth. Retail sales, exports, home sales and construction spending all fell sharply in December, raising fears of imminent trouble for the economy.

“February job growth was surprisingly slow as employers added to payrolls at the slowest pace since September 2017,” said Curt Long, chief economist at the National Association of Federally Insured Credit Unions.

“One poor report should not set off alarm bells, but given that the labor market is the lynchpin for the entire economy, it does add to existing concerns and raises the stakes for next month’s report.”

Some economists cautioned against weighing the February jobs slump too heavily. Elise Gould, senior economist at the left-leaning Economic Policy Institute, said the report “is a useful time to remember that one month’s data does not make a trend.”

Gould noted that hiring gains over the past three months were 186,000 jobs, which she said was “likely a better reflection of underlying conditions.

Mark Hamrick, senior economic analyst at Bankrate.com, said “slowing job growth is to be expected over the coming year, one way or the other,” but blamed much of the February shortfall on a seasonal hiring slowdown in the construction and leisure and hospitality sectors.

“It is fodder for a reminder that we cannot assume too much about a single monthly report.”

The February jobs report reflected the first full month of hiring following the 35-day partial government shutdown. The number of part-time workers seeking full-time jobs dropped by 837,000 in February, which likely reflects furloughed federal workers returning to their posts.

“The headline jobs number disappointed compared to forecasts, but in the context of a shutdown, some possible seasonal considerations and a healthy productivity report, there is reason not to read too much into the disappointing payroll gain,” said Gordon Gray, director of fiscal policy at the American Action Forum, a right-leaning think tank. 

Updated at 9:18 a.m.