The labor market outperformed expectations in February according to the latest report from the Labor Department, with 273,000 new jobs added to the market last month vs. 175,000 expected. The unemployment rate fell back to 3.5%, with companies continuing to hire in the US despite market concerns surround the escalating coronavirus outbreak developing worldwide.
- February added 273,000 jobs last month and unemployment fell to a rate matching a 50-year low.
- Job growth was forecast at just 175,000 for February.
- The average workweek rose to 34.4, indicating increased productivity, and hourly earnings rose 3%.
February saw unexpected strength in labor with a surge of hiring despite the virus outbreak. December estimates were revised upward from 147,000 jobs to 184,000 jobs ,and January estimates rose from 225,000 to 273,000, a total of 85,000 extra jobs previously unaccounted for, bringing the three-month average to 243,000.
Healthcare and social assistance added 57,000 jobs, food and services added 53,000, and government employment added 45,000. Construction added 42,000, professional and technical services added 32,000, and finance rose by 26,000. The latest jobless claims data indicates that layoffs have not increased so far as a result of the coronavirus outbreak, despite an increasingly large number of companies reporting disruption to their processes and supply chains. According to job placement firm Challenger, Gray, and Christmas, layoffs dropped 16% since January.
Here's the Achilles Heel of the US job market: Wage growth is FALLING.
That's really odd in a hot labor market. You would employers to keep hiking pay. Instead...
— Heather Long (@byHeatherLong) March 6, 2020
While the labor market appears to be in very good health for the time being, analysts are still concerned about the potential impact of the coronavirus outbreak. The Federal Reserve implemented the first emergency rate cut since the 2008 financial crisis on Tuesday to shield the economy from some of the fallout, triggering a sellout in equities and strengthening the price of gold. The central bank of Canada has also implemented a matching 50 basis point rate cut.
Charles Schwab investment strategist Liz Ann Sonders commented on the significance of the labor market data, saying it’s more important than ever to focus on these reports. Sonders pointed out that reports of
“If we start to handle things the way they’re handled in Italy and South Korea, closing schools and having mandated cancellations of travel and sporting events, I think there’s no way we don’t start to see it in the labor market and in consumer confidence and spending,” Sonders said.
Gold prices have seen upward momentum in today’s session, adding to yesterday’s gains. Spot gold last traded at $1,683.38/oz, up 1.02% with a high of $1,689.86 and a low of $1,666.31/oz. Gold prices have been influenced by market panic surrounding the coronavirus outbreak and the recent Federal Reserve rate cut, strengthening the demand for gold as a safe haven asset.