US economy adds just 20,000 jobs in February, well below expectations

The United States added just 20,000 jobs in February, significantly below expectations of a 180,000 gain, and a sign that the job market might be beginning to cool.

The unemployment rate fell slightly to 3.8 percent, the Labor Department reported Friday.

Economists did not immediately panic as hiring has been strong in recent months and they do not see one weak number as a signal of an imminent recession. But the disappointing February figure comes as growth is slowing. The tax cuts and stimulus of additional government spending seem to be wearing off, economic growth abroad has weakened, and the partial government shutdown and ongoing trade tensions appear to be weighing on consumer and business spending.

Hiring was slow in every industry except health care and white-collar businesses. Construction lost 31,000 jobs and leisure and hospitality, which is normally a driver of growth, was unchanged.

Economists have been predicting hiring would slow down for awhile now. Job openings exceed the number of unemployed, meaning there aren't many Americans left to hire and many companies complain they can't find the talent they want.

Wages grew 3.4 percent in the past year, the best annual gain since April 2009, when the United States was in the Great Recession. Wages are now growing well above the cost of living. Inflation has been just 1.6 percent in the past year, according to the Commerce Department.

The current labor market is widely viewed as the best since the start of the 2000s, most economists and business leaders say. There is so much demand for highly-skilled workers with specialized data and computer skills that employers are sometimes hiring and poaching workers when they don't have an actually job opening for them.

"We know there will be demand for them soon," said Martin Fleming, chief economist at IBM, who said the company has been hiring MBAs and people coming out of PhD programs even when there isn't necessarily a job posting for them because it's a "highly competitive landscape" between IBM, Facebook, Amazon, Google, etc. for top young talent.

The gains are also starting to show up in some lower-skilled jobs. Wages have generally been rising fastest for the lowest earning workers, a sign that it's getting harder to find people for all kinds of jobs even in restaurants and retail and that minimum wage increases in 19 states in January are having an impact.

Many economists were quick to point out that the data can jump around a lot month to month and January saw a particularly strong 311,000 jobs added, so the anticipation was for a weaker February.

The last month when hiring was this slow was September of 2017, when only 18,000 jobs were added. The following month, the U.S. economy added 260,000 jobs.

The unemployment rate is calculated through a different survey than the jobs number, and the two sometimes diverge, which may partly explain how the official unemployment rate fell despite the slow job growth.