Robust job growth in U.S. prior to virus

WASHINGTON • U. S. employers maintained a robust pace of hiring in February, giving the economy a boost heading into the coronavirus outbreak, which has stoked fears of a recession and prompted an emergency interest rate cut from the Federal Reserve.

The Labor Department’s closely watched monthly employment report on Friday also showed solid monthly wage growth and the unemployment rate falling back to near a 50-year low of 3.5 per cent. Employers also increased hours for workers last month.

But the strong report likely does not fully capture the impact of the coronavirus, which spread in the United States beginning in late February, leaving financial markets and economists anticipating severe economic disruptions in the months ahead. Financial markets see the virus, which causes a flulike illness, the catalyst that could interrupt the longest economic expansion on record, now in its 11th year.

U. S. Treasury prices rallied, with the yield on the benchmark 10- year government bond dropping to a record low of 0.695 per cent. The dollar fell against a basket of currencies, while stocks on Wall Street were sharply down.

“Sadly, these job numbers are sure to be eclipsed by response to the spread of the coronavirus,” said Michael Hicks an economist at Ball State University. “The supply shocks from quarantined factories in Asia are weeks away from idling U. S. factories, and the demand- side impact on tourism, travel, eating and drinking establishments is already being felt across the world. The March jobs report, will be far less optimistic.”

The Fed on Tuesday slashed its benchmark overnight interest rate by a half percentage point to a target range of 1.00 per cent to 1.25 per cent, in the U. S. central bank’s first emergency rate cut since 2008 at the height of the financial crisis. Fed chair Jerome Powell acknowledged the economy’s strong fundamentals, but said “the coronavirus poses evolving risks to economic activity.”

Financial market are anticipating further rates cuts at the Fed’s meeting later this month.

Nonfarm payrolls increased by 273,000 jobs last month, matching January’s tally, which was the largest since May 2018. While transportation and warehousing payrolls fell by 4,000 jobs, suggesting some early impact from the coronavirus, the drop was eclipsed by gains nearly across all sectors.