By Thomas Cooley and Peter Rupert
The Bureau of Labor Statistics reported that establishment data showed a 273,000 boost to employment with an additional 48,000 added to January payrolls (from 225,000 to 273,000) and another 37,000 to December’s total (from 147,000 to 184,000). Early expectations by some forecaster’s was closer to 175,000. Of course, the Coronavirus would not have much of an impact on the February numbers. Indeed it had hardly shown up in the U.S. until now. Over the next several months the impact could be substantial but anything we write here would be pure speculation. We will have to wait and see what transpires over the next few months.
The goods producing sector saw another strong increase of 61,000 and the service sector 167,000 and the government sector added 45,000.
Average weekly hours increased to 34.4 and average hourly earnings climbed 11 cents to $28.52.
The household data showed a drop in the labor force, -60,000. The number employed was up only 45,000 while there were -105,000 fewer unemployed. Therefore, the labor force participation rate showed no perceptible change, the employment to population ratio down slightly and the unemployment rate dropped from 3.58% to 3.52%.
What happens next?
Clearly the coronavirus is going to have a significant impact on employment in the coming months. How big is a matter of speculation but the prospects are significant enough to have caused the Fed to lower its target rate by 50 basis points. The impact of the rate decrease is unlikely to be very significant aside from the fact that the Fed is using up its firepower with little clear objective in sight.
The immediate impacts of the pandemic employment will most likely be in services, particularly travel and transportation services. Tourism and leisure sectors will also be impacted relatively quickly. Off-setting factors will be increased demand for health care workers and laboratory and diagnostic services.