3/19/2020 U.S.

Added 273,000 Jobs in February Before Coronavirus Spread Widely - The New York Times

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U.S. Added 273,000 Jobs in February Before

Coronavirus Spread Widely
The monthly employment report left unanswered questions about the potential economic impact of the outbreak.

By Patricia Cohen

March 6, 2020

For the second month in a row, the economy churned out a blockbuster number of jobs, the government reported Friday, an impressive
performance in an era of slow-and-steady employment growth.

With the coronavirus outbreak shaking economic confidence, the solid showing in February may not be a harbinger of continued strength.

Still, the report from the Department of Labor offered a refreshing breath of positive economic news. Employers expanded payrolls by
273,000 jobs in February, while revisions to data from previous months added 85,000 more jobs to the tally. The jobless rate ticked down to
3.5 percent.

“It’s certainly a relief that we had a strong tailwind,” said Diane Swonk, chief economist at Grant Thornton. “Service, leisure and
hospitality, these are all very vulnerable. The good news is that these workers had some cushion ahead of time. It helps blunt the blow.”

Indeed, the report is evidence of just how much momentum the American economy had going into the coronavirus crisis. Monthly payroll
gains averaged 231,000 over the past six months. The average for the previous six months — March through August 2019 — was just
171,000.

“JOBS, JOBS, JOBS!!!” President Trump wrote on Twitter.

Every jobs report looks backward, but February’s report captures a particularly unusual moment, before the market was gripped with
anxiety about the global impact of a widening epidemic.

“There is a red line in the calendar,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The value of it is that this
report gives us kind of a benchmark of where we were before things began to go wrong.”

The government’s estimate of payroll increases is based on surveys of companies completed by the middle of the month, when the
prevailing sentiment was that the United States would remain relatively unaffected.

A clearer picture of the impact from disrupted supply chains and travel, entertainment and dining plans should emerge over the next
couple of months.

Any chill in hiring has yet to be felt.

There were scattered reports this week about a potential downturn in employment particularly in the most vulnerable sectors:
transportation, hospitality, entertainment and travel.

Airlines are clearly feeling the squeeze. This week, United Airlines announced that it was imposing a hiring freeze through June,
postponing scheduled merit raises and inviting employees to apply for unpaid leave.

The number of canceled or postponed conferences is racking up, which hurts not only hotels and convention centers but also restaurants
and stores that cater to those visitors.

“Layoffs are here,” a respondent in the transportation equipment sector said when surveyed by the Institute for Supply Management for
its monthly manufacturing report.

But so far deep dents in employment seem more feared than real.

“We have lots of job openings, and we are adding to them,” said Rick Woldenberg, chief executive of Learning Resources in Vernon Hills,
Ill. The company, which makes educational materials and toys, employs 200 people in the United States, and has at least 10 openings in
sales, marketing and operations.

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3/19/2020 U.S. Added 273,000 Jobs in February Before Coronavirus Spread Widely - The New York Times

Rick Woldenberg, owner of Learning Resources, said his company was still hiring and
had at least 10 openings. Lenny Gilmore for The New York Times

The company’s suppliers are in Guangdong, a Chinese province that has not been at the center of the outbreak. There have been a few
kinks in orders and deliveries, he said, but nothing unusually serious.

“Businesses crave certainty, and certainty isn’t the word of the day,” Mr. Woldenberg said. So he is doing what many business owners
always do: managing as best as he can.

“I’m just an elf at the workbench,” he said, explaining his reaction to the conflicting and confusing economic signals.

Amy Glaser, senior vice president at the staffing firm Adecco, said, “We’re not seeing an impact yet.” The one trend she has noticed in the
last few days is that employers are arranging for preliminary interviews to be done remotely instead of in person.

Becky Frankiewicz, president for North America at ManpowerGroup, an employment agency, said she, too, had not seen any pullback,
even in the hospitality and travel industries. The labor market is tight, she said. “We continue to see a huge demand” for temporary and
permanent workers.

Jobless claims throughout the United States have remained at rock-bottom levels.

At Eastman Machine in downtown Buffalo, Robert Stevenson, the president and chief executive, said he wanted to add at least six people
to his 137-person payroll.

“We had a great year last year, and business is good,” said Mr. Stevenson, who also has a factory in Ningbo, China, a coastal city south of
Shanghai. In early January, Eastman got a large order from a Chinese wind-energy company that was so eager for the machinery, it
recently agreed to pay the steep increase in airfreight prices that followed the cancellation of many flights to China.

For Mr. Stevenson, the labor shortage is still the most pressing problem. “Our issue is finding qualified people,” said Mr. Stevenson, who
wants to expand his engineering and software staff.

The strong labor market provides a cushion against shocks.

The remarkable payroll gains last month were all the more surprising since cooling job creation is to be expected during the 11th year of
an economic expansion.

There were a few signs of weakness in the report. Wage growth, which was already slowing from last year’s peak, was less impressive.
Average hourly wages were up 0.2 percent, bringing down the year-over-year gains to 3 percent.

Diane Lim, an economist at the Penn Wharton Budget Model, said the first impact from the coronavirus on the labor market was likely to
show up in reduced hours for service workers. “Entertainment, hospitality, food and lodging, service jobs — they won’t lose their jobs but
will probably get a cut in hours,” she said.

So far, though, the average number of hours Americans work in a week has held up.

At Milwaukee Electronics, a Wisconsin manufacturer of circuit boards, the warnings from Asian suppliers started coming in shortly after
the Lunar New Year holiday in February: Prepare for delays.

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“Our component vendors are telling us to brace for shortages, potentially some substantial ones,” said Duane Benson, the company’s
director of marketing.

The company has been saving up inventory, reaching out to suppliers and working with customers to adjust timelines. What it has not had
to do, however, is cut jobs or reduce hours.

In the short term, the outbreak might even be good for business. The company’s Screaming Circuits division in Oregon, which usually
handles smaller, shorter-deadline orders, has had a surge in inquiries from customers looking to bring production back from China, at least
temporarily.

“We started getting calls from folks who typically send stuff offshore,” Mr. Benson said.

Of course, if disruptions persist, Screaming Circuits, too, might struggle to get the parts it needs to fill orders. If it has to give up business,
it could be forced to make harder choices. But Mr. Benson said the company would try to avoid cutting jobs.

The strength of the labor market early this year at least gives the economy some buffer against the shock of the coronavirus, said Karin
Kimbrough, chief economist of the professional networking site LinkedIn.

“I don’t think we were starting from a point of weakness,” she said. “The economy in the U.S. was pretty solid.”
Ben Casselman contributed reporting.

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