• US payrolls rose 273,000 in both January and February
  • Unemployment rate dipped back to cycle-low 3.5%
  • February employment data is stale given coronavirus concerns

The US labour market was on solid footing through the first two months of the year with back-to-back payroll gains of 273,000 (census hiring made only a modest contribution). That represents the best two-month increase in two years. A dip in the unemployment rate back to a 50-year low also made for what would normally be an encouraging report, though wage growth remained contained at 3.0% year-over-year.

But given its backward-looking nature, this morning’s numbers will do little to soothe financial markets amid growing worries about the economic impact of coronavirus. Labour market data likely won’t be the first to show signs of economic dislocation related to the outbreak and containment efforts. Sentiment readings (business and consumer confidence will be key channels for any economic slowdown, and PMI data will show supply chain disruptions) and spending data (particularly on travel, tourism and hospitality) are likely to show the earliest impacts. But any drop-off in hours worked (if people are forced to stay home due to school or workplace closures) or layoffs due business disruption (yesterday’s initial claims data didn’t raise any alarms) would indicate a deeper impact from the coronavirus outbreak. So while today’s payroll numbers are impressive, this data is already well past its sell-by date.


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