Before coronavirus crisis, job outlook looked robust

That strength could be a small buffer against downturn

WASHINGTON — Hiring in the United States jumped in February as employers added 273,000 positions, evidence that the job market was in strong shape before the coronavirus began to sweep through the nation.

The Labor Department said Friday that the unemployment rate fell to 3.5% last month, matching a 50-year low, down from 3.6% in January.

The monthly job gain comes from a survey of payrolls done in the second week of February, predating the viral outbreak. Still, many economists were encouraged by the message that the jobs report sent about the economy’s health before the disease.

“The U.S. economy clearly approached the COVID-19 shock with a head of steam, which is good news,” said Neil Dutta, an economist at investment strategy firm Renaissance Macro Research. “You want to be in a position of strength when a crisis hits.”

So far, there are few signs that the job market has been affected by the disease, but most economists expect hiring to slow in the coming months. Businesses are restricting business travel, factories are facing supply disruptions from manufacturing shutdowns in China and some Americans are delaying vacations.

“The outbreak will likely lead (businesses) to postpone some hiring plans or even shed jobs if the situation worsens,” said Lydia Boussour, senior U.S. economist at Oxford Economics.

Wage growth slowed slightly in February, rising 3% compared with a year earlier, down from a 3.1% year-over-year average gain in January. Paychecks have grown at a 3% pace or higher for more than a year and a half but have slowed since reaching 3.5% last summer.

The government on Friday also upgraded its estimate of job growth in December and January by a combined 85,000 more than it had previously reported. Over the past three months, U.S. employers have added 243,000 jobs — the best quarterly pace since September 2016.

If employers were to start slashing jobs as a consequence of the virus, it could escalate the economic damage. For that reason, a range of job market barometers will provide some of the most vital signals about how the economy is withstanding the virus’ impact.

Widespread layoffs can transform slowdowns in one or two sectors — the travel industry, say, or manufacturing — into a full-blown downturn for the overall economy. When workers lose jobs and pay, they typically cut spending. Their friends and relatives who are still employed grow wary of spending freely, a cycle that can trigger further job cuts.

So long as monthly job gains remain above 100,000 or so, the unemployment rate should stay low and the economy may be able to avoid a downturn. If the monthly pace were to sink below that for a sustained period, joblessness would likely rise.

The latest unemployment data, issued Thursday, was reassuring: The number of people seeking benefits dropped 3,000 to 216,000 in the week that ended Feb. 29.