US employment surges in Feb with 273,000 gain

Bloomberg

US employment surged last month with the biggest gain since May 2018, indicating the labour market was on especially solid footing before the spread of the coronavirus
intensified.
Payrolls rose 273,000 after the prior month was revised up to also reflect a 273,000 gain, according to Labour Department data that beat all forecasts in Bloomberg’s survey calling for 175,000. The jobless rate fell back to a half-century low of 3.5% as average hourly earnings climbed a steady 3% from a year earlier.
The data did little to alter a flight to safety in financial markets, as investors remained focused on the potential economic fallout from the virus.
The yield on the 10-year Treasury was down 17 basis points to 0.74% while the S&P 500 fell 2.6%.
The surprisingly strong hiring signals that employment was holding up as virus concerns grew, though the report reflects conditions through mid-February, before the impact from disruptions abroad as well as the intensification of the US outbreak.
“An important piece of good news here is that while we face these extraordinary uncertainties — and I think that’s going to continue throughout most of 2020 — our economy coming into this was much more resilient than say Germany or Japan,” Lara Rhame, chief US economist for FS Investments, said on Bloomberg TV.
The Federal Reserve has said the labor market remains strong but employment could be poised for broad disruption should the outbreak spread further through the American workplace. Such a risk to economic activity spurred the central bank to cut interest rates Tuesday in the first emergency move since the 2008 financial crisis.
Speaking after the rate-cut announcement, Fed Chairman Jerome Powell said the fundamentals of the economy remain strong, citing the low unemployment rate, solid pace of job gains and steady wage increases. Still, Treasury yields have continued to plunge on signs the virus is spreading uncontained.
In the days since the rate cut, the economic impact of the virus has become more apparent with airlines and hotels warning of lost revenue amid canceled conferences. Meanwhile, large companies are ordering employees to work from home, depriving restaurants of business.
“The downside risks to the labour market are clear over the next four weeks,” Credit Suisse Chief Economist James Sweeney said, referring to the threat posed by the coronavirus.
President Donald Trump called the jobs report numbers “really incredible” and said he didn’t know whether additional stimulus from the government is needed.
White House economic adviser Larry Kudlow also praised the employment data as a “blowout.” Speaking on Bloomberg Television, Kudlow said the virus may have a temporary impact on the economy while saying that the administration is working on potential fiscal measures and could move “very rapidly” with “targeted and timely” initiatives.