Job Growth Remained Strong Through February with 300,000+ Jobs Added

Following a bombshell jobs report in January, the US economy showed no signs of slowing down in February. Job growth once again exceeded expectations by almost 100,000 jobs (311,000 observed vs. 225,000 expected) in the most recent report by the Bureau of Labor Statistics. February now stands as the month with the second-highest job growth reported since July 2022.

The unemployment rate ticked up slightly

While the unemployment rate reached a 54-year low last month this number didn’t hold. The rate increased slightly from 3.4% to 3.6%, despite experts predicting the rate to remain at January levels. Among the major working groups, only Hispanics saw an increase in unemployment while the rates for adult men, adult women, teenagers, Whites, Blacks, and Asians showed little change from January.

The labor force participation rate rose also slightly to 62.5%. However, this number remains below pre-pandemic levels (63.3%) as many employees haven’t returned to work following the COVID-19 pandemic.

The leisure and hospitality industry continues to grow

The sector that saw the largest increase in February was leisure and hospitality, following several months of post-pandemic growth. 105,000 jobs were added last month, 14,000 more than the monthly average reported in 2022 (91,000). Employment in leisure and hospitality now stands just 2.4% below pre-pandemic levels.

“Not surprisingly, leisure and hospitality once again saw the biggest gains in February, as the industry continues to edge its way up to pre-pandemic levels,” Geno Cutolo, head of Adecco North America, told SHRM.

Other major gains were seen in healthcare and social assistance (+62,800), retail trade (+50,100), government roles (+46,000), and construction (+24,000). The transportation and warehousing industry, on the other hand, saw a loss of 25,000 jobs last month.

Are recession fears unfounded?

Americans have been wary of a recession since last summer, yet the jobs market has continued to grow since then. After months of a red-hot labor market should we still be worried?

Economists are divided, with some surmising that we’ll be seeing a new type of economic recession hit. While Americans have been saving more with lower levels of debt, consumer spending peaked last summer, showing that while the jobs market continues to grow, the economy may be slowing down slightly. This decrease in consumer spending has affected the economy mostly in the form of tech layoffs as millions aren’t spending as much on electronics in 2023.

Gregory Daco, the chief economist at Ernst and Young’s EY-Parthenon consulting group, explains that we could see a gentler version of a recession saying: “So we have not seen the type of severe pullback we usually see at the onset of a recession, where businesses look to cut costs rapidly. So the pullback is likely to be softer and more gradual than in the past. We’re not going to see broad-based layoffs.”

Economists have also noted that traditional benchmarks of a recession haven’t been observed lately. The construction industry has been frequently flagged as a key area to watch when fears of a recession are stoked, yet the sector has seen above-average growth so far in 2023.

Continual job growth and a slowdown in consumer spending may indicate that the American economy is on track for the so-called “soft landing” that the Federal Reserve hopes for. However, only time will tell if this is achieved, especially since the Fed will meet again on March 15 to discuss further interest rate hikes. Watch this space for updates on how these policies will affect the jobs market.

Adecco is here to help

With an unpredictable job market that changes month-to-month, it can be hard to predict what’s coming next. Luckily, our services will help you stay ahead. At Adecco, we can quickly mobilize the right pre-qualified temporary and direct hires at the best pay rate to match market demand. In addition to connecting you with experienced workers, we’ll help you retain them through optimized wages, benefits, and comprehensive training. Talk to us about how we can help you seize the opportunities today while preparing your workforce for an uncertain tomorrow.

Want to know more about the Jobs Report? Hear Adecco experts discuss the February numbers at Bloomberg and U.S. News & World Report.