An expectation-beating jobs report out today suggests that the U.S. labor market has the wind at its back heading into the coronavirus crisis. The economy added 273K jobs in February, and gains from the prior two months put the 3-month average job gain at an impressive 243K.
Economists have been predicting for several years now that job gains would slow down as we approached full employment. Remarkably, they appear to be accelerating instead. Not only are payrolls expanding, but hours worked rebounded as well in February, delivering a boost to growth in weekly earnings. (Growth in hourly earnings remains disappointingly flat.)
Industries with the largest gains
1. Healthcare and social assistance added 57K jobs. Healthcare hiring could accelerate further in the coming months. Already in the ZipRecruiter marketplace, we are seeing a surge in job postings for nurses, paramedics, medical researchers, and public health experts, partly due to the anticipated need for additional staff to help with screening, testing, patient care, and the public policy response.
2. Food and drinking places also posted a huge gain of 53K jobs. Growth in that industry could stall in the coming months if Americans avoid large gatherings and stay home to avoid the risk of contracting the disease. Already, 8% of workers told ZipRecruiter in a survey conducted this week they were working from home to avoid coronavirus.
3. Construction added a similarly robust 42K jobs. Growth in that sector could hold steady as we head into peak construction season. The Fed Reserve’s response to coronavirus–a large interest rate cut–could add further fuel to the housing market and push construction spending beyond current record highs.
The potential impact of coronavirus in the following months
Of course, the jobs report is backward-looking, not forward-looking. The surveys were conducted in the week containing February 12. Things could still get very ugly in the coming months. Supply chain disruptions could worsen the retail apocalypse and deepen what some are calling a manufacturing recession. A coronavirus-related demand shock could also stall or reverse the impressive job gains we’ve seen in leisure and hospitality if Americans cancel flights, avoid conferences, steer clear of restaurants, and choose Netflix over movie theaters.
Even if private sector hiring takes a hit in the coming months, however, the slowdown could be offset by a fortuitously timed surge in government hiring as 500K Census workers are added to payrolls between March and July. And the slowdown could be milder and shorter thanks to the job market’s momentum heading into the crisis.