After a surge of job creation to start the year, the question for everyone in February is simple: Were January’s numbers a harbinger, or just a fluke?
On average, economists expect the U.S. Labor Department to report on Friday that employers added 200,000 positions last month after a surprising 353,000 in January. But the range of forecasts is unusually wide, reflecting uncertainty about the labor market’s direction. Six months ago, many predicted a significant slowdown, with growth confined to a few industries.
“Last year we were talking about how it’s only a few sectors, job growth has decelerated a lot — but then we saw a broadening in December and January,” said Rubeela Farooqi, chief economist at High Frequency Economics. “These two months, are they signaling a new trend?” The January data did not allow a definitive conclusion, she said, with winter storms and statistical revisions muddying the picture.
There’s plenty to argue for another impressive month. The February weather was unseasonably warm, allowing people who had to stay home in January during winter storms to return to work. Despite high-profile layoff announcements in Silicon Valley, overall initial jobless claims for unemployment insurance have remained subdued. And consumers have kept spending as measures of sentiment rebound.
The outlook isn’t rosy for everyone. Job opening rates have fallen sharply for retail, transportation and warehousing, as well as accommodation and food services, while remaining elevated in health care and social assistance. The rate at which people are quitting their jobs has sunk below prepandemic levels, suggesting a degree of lock-in as workers survey their options and decide to stay put.
But that could have some benefits, such as allowing employers with persistent shortages, like state and local governments, to finally fill their ranks. A slower-moving labor market also allows employers to invest more in training, which may have contributed to the recent boom in productivity growth.
“That probably has to do with employers and employees finding better matches,” said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas. “But also companies investing in and training their workers, because hiring is so much more expensive.”