What's going on?
Official data released on Friday showed that US unemployment fell in February but the economy only added 20,000 jobs – economists were expecting nine times as many (tweet this).
What does this mean?
Jobs data can be unpredictable. The pickup in hiring through the holiday season was unexpected and the subsequent government shutdown created hard-to-forecast disruption. Nevertheless, the US economy adding its fewest number of jobs since late 2017 was a shock – and led some investors to herald this as evidence of an economic slowdown.
It’s not all doom and gloom: some economists instead look at the average number of jobs created in each of the last three months, which is around 186,000 – the level they’d expect at this late stage of the economic growth cycle.
Why should I care?
For you personally: Ask your boss for a raise.
Government employees temporarily laid off by the shutdown through most of January returned to work in February, resulting in a lower-than-expected unemployment rate for the month. The proportion of people gainfully employed or looking for work in February held steady from January – but average wages rose by more than expected. This, along with few job additions, could mean “full employment” is edging closer. To find workers, companies may increasingly have to offer bigger pay packets to tempt people away from their current jobs. That could make now a good time to ask for that raise – you are irreplaceable after all…
Zooming out: All that work… for nothing?
“Productivity” – a measure of output produced per hour of work – grew by slightly less than 2% in the last quarter of 2018. Figuring out how to increase declining productivity growth is a challenge the US economy faces; but it’s a more pressing concern in Europe, where productivity fell in the fourth quarter of last year – and at the fastest rate since 2009. Declines in Germany, the beating heart of the eurozone economy, were largely to blame.