In February, the U.S. added 379,000 jobs with the unemployment rate reaching 6.2%. Nonfarm payrolls increased by 379,000 in February and the unemployment rate was 6.2%. Both figures came in ahead of expectations as analysts were looking for a gain of 210,000 jobs with an unemployment rate of 6.3%.
Inside the Numbers
The strongest component of the economy was the hospitality sector which saw 355,000 new jobs added. In total, the industry is 3.5 million jobs below where it was in January 2020. However, employment should increase in the sector as long as the virus remains continued and vaccinations continue. The better than expected figure is in-line with the plunge in coronavirus case counts since early January, and the gradual reopening in many parts of the country.
Sectors that saw job losses were education, construction, and mining. Some of the job losses in these sectors could be attributed to weather. Healthcare accounted for an increase of 46,000 jobs, while retail added 41,000. Manufacturing added 21,000 jobs.
The U6 unemployment rate was unchanged at 11.1% which reflects that the economy remains off by around 8.5 million jobs since the pandemic started. On a larger sense, the report does little to make up for the economic damage of the coronavirus. At this pace of job creation and including population growth, employment wouldn't reach pre-pandemic levels until 2023.
Another positive was upward revisions to the January jobs number which was increased to 166,000 from 49,000. The labor force participation rate held steady at 61.4%.
The stock market had a sharp jump following the report's release as it went from down 250 points to a 250-point gain. This is despite a selloff in many tech stocks. When the selling hit an exhaustion point, mid-day stock futures turned around to finish 570 points higher. Yields also jumped higher with the 10-year Treasury hitting 1.66% which was a test of February's high.
Looking forward, there are several reasons to be positive. The economy will return to normal sometime in Q2 at the current pace of vaccinations. This will unleash significant pent-up demand. The passage of the $1.9 trillion stimulus bill is also going to add 2 to 3% to GDP growth. Finally, household finances are in great shape which means there is room for more spending capacity. At the same time given the employment situation, the Fed is not going to be raising rates anytime soon.