US nonfarm payrolls added 273,000 in February, nearly 100,000 above the consensus expectation of 175,000. Revisions to the prior two months added 85,000 more jobs to the previously reported totals. The December tally was revised up by 37,000 to 184,000 from 147,000, and the January figure was revised up by 48,000 to 273,000 from 225,000. The six-month average jumped higher to 230,700.
Labor Force and Unemployment
The unemployment rate fell 0.1 percentage points to 3.5%, matching the lowest level since December 1969. The all-in unemployment rate (U-6) rose, up 0.1 percentage points to 7.0%, just above its lowest level since the series began in 1994. The labor force lost 60,000 workers, holding the total workforce at 164.6 million. The labor force participation rate also held steady at 63.4%, hovering at the highest level since 2013.
Service-providing industries added 167,000 workers, while goods producers added 61,000, double its 24-month average. Retail trade was the lone negative segment during February, which is on par with its 24-month average.
Manufacturing added 15,000 jobs in spite of the Boeing MAX production shutdown, contrary to our expectation. The bulk of the job gains were automotive manufacturers within transportation.
Government added 45,000 workers, which was substantially stronger than expected in February. The majority of the new positions were on the state and local levels. The federal payrolls grew by 8,000, but 7,000 were temporary workers for the 2020 Census.The rest of the industry results were largely in line with their two-year trend.
Wage & Worktime Trends
The average workweek for private employees edged up by 0.1 to 34.4 hours. Average hourly earnings for all employees jumped 9 cents to $28.52, up 3.0% from a year ago, which was a touch slower than the January pace.
The average workweek for production and nonsupervisory workers—representing more than 80% of the US labor force—rose by 0.1 to 33.7 hours. Average hourly earnings for these workers rose 8 cents to $23.96, which is up 3.3% from a year ago. The average workweek in manufacturing also rose, up 0.3 to 40.7 hours, which is an 11-month high, and overtime edged up 0.1 to 3.2 hours.
The February report was very encouraging, highlighted by back-to-back monthly jobs gains of almost 275,000, a feat not achieved since early 2018 and 2016 before that. It also showed firming wage and worktime data.
That optimism, however, is offset by the COVID-19 outbreak, which has led to the precautionary canceling of events and sweeping non-essential travel bans by many companies in the US and abroad. Indeed, this will be disruptive to the US economy, but the impact should be temporary, based on China’s experience. To wit, production in China is quickly ramping up after being shut down for roughly a month.
Accordingly, our base case is that the momentum in the US should help the economy power through and skirt a recession. Moreover, given ample liquidity, heavier-than-normal levels of cash reserves (savings for consumers) and easing financial conditions, we believe US consumers and companies have the wherewithal to weather the COVID-19 outbreak.
This material was provided by SunTrust Private Wealth Management for use by BB&T Wealth
Advisory managed account programs entail risks, including possible loss of principal and may not be suitable for all investors. Please speak to your advisor to request a firm brochure which includes program details, including risks, fees and expenses.
SunTrust Private Wealth Management is a marketing name used by Truist Financial Corporation and the following affiliates: Banking products and services, including loans and deposit accounts, are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank and SunTrust Delaware Trust Company. Securities, brokerage accounts and /or insurance (including annuities) are offered by SunTrust Investment Services, Inc., BB&T Securities, LLC, and P.J. Robb Variable Corp., which are SEC registered broker-dealers, members FINRA, SIPC, and a licensed insurance agency where applicable. Investment advisory services are offered by SunTrust Advisory Services, Inc., GFO Advisory Services, LLC, BB&T Securities, LLC, Sterling Capital Management, LLC, Precept Advisory Group, LLC, and BB&T Institutional Investment Advisors, Inc., each SEC registered investment advisers. BB&T Sterling Advisors, BB&T Investments and BB&T Scott & Stringfellow are divisions of BB&T Securities, LLC. Mutual fund products are advised by Sterling Capital Management, LLC.
While this information is believed to be accurate, SunTrust Banks, Inc., now Truist Financial Corporation, including its affiliates, does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these analyses or market data.
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but Truist Financial Corporation makes no representation or guarantee as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. The information contained herein does not purport to be a complete analysis of any security, company, or industry involved. This material is not to be construed as an offer to sell or a solicitation of an offer to buy any security.
Opinions and information expressed herein are subject to change without notice. STIS and/or its affiliates, including your Advisor, may have issued materials that are inconsistent with or may reach different conclusions than those represented in this commentary, and all opinions and information are believed to be reflective of judgments and opinions as of the date that material was originally published. STIS is under no obligation to ensure that other materials are brought to the attention of any recipient of this commentary.
Truist personnel are not permitted to give legal or tax advice.
Investments involve risk and an investor may incur either profits or losses. Past performance should not be taken as an indication or guarantee of future performance.
STIS/STAS shall accept no liability for any loss arising from the use of this material, nor shall STIS/STAS treat any recipient of this material as a customer or client simply by virtue of the receipt of this material.
The information herein is for persons residing in the United States of America only and is not intended for any person in any other jurisdiction.
Investors may be prohibited in certain states from purchasing some over-the-counter securities mentioned herein.
The information contained in this material is produced and copyrighted by Truist Financial Corporation and any unauthorized use, duplication, redistribution or disclosure is prohibited by law.
STIS/STAS’s officers, employees, agents and/or affiliates may have positions in securities, options, rights, or warrants mentioned or discussed in this material.
Asset classes are represented by the following indexes. An investment cannot be made directly into an index.
S&P 500 Index is comprised of 500 widely-held securities considered to be representative of the stock market in general.
©2020 Truist Financial Corporation. BB&T, SunTrust®, the SunTrust logo, and Truist are service marks of Truist Financial Corporation. All rights reserved