(AFP) – The United States unexpectedly lost jobs in February while unemployment edged up, government data showed Friday, piling pressure on President Donald Trump’s economic agenda as key midterm elections approach. The world’s biggest economy shed 92,000 jobs last month, in a sharp reversal from the job growth of 126,000 in January, said the Labor Department. The unemployment rate, meanwhile, crept up to 4.4 percent from 4.3 percent.
White House economic adviser Kevin Hassett insisted Friday that the US economy remained “really strong,” telling CNBC that observers should consider the average job growth over a few months instead of focusing on monthly fluctuations. But Chuck Schumer, who leads the Senate’s Democratic minority, swiftly criticized the report as a “blaring alarm” that Trump’s economy was “deteriorating rapidly.” “Tariffs are increasing costs, gas prices are spiking, and jobs are evaporating,” Schumer said.
Fueling the overall plunge in February was a fall in health care employment due to strike activity, said the Labor Department. But data showed that other sectors were also struggling. Construction lost 11,000 jobs while manufacturing shed 12,000 roles. Transportation and warehousing slumped as well, while employment in leisure and hospitality tumbled by 27,000 jobs from January. The federal government continued losing jobs too. The trend, if it persists, is set to strain Trump’s attempts to ease worries about affordability ahead of November midterm elections. GDP growth may be holding up, but policymakers have flagged a divergence where wealthier households are doing well but medium- and lower-income families are struggling.
– Risks ahead – Economists widely expected a sharp slowdown in job growth this month, although not an outright decline. “The idea the labor market has turned a corner implodes with this report,” said economist Samuel Tombs of Pantheon Macroeconomics. He expects “elevated federal policy uncertainty, still high borrowing costs for small businesses” and a hit to disposable incomes from an oil prices surge following war in the Middle East to “limit employment growth” moving forward.
Nationwide chief economist Kathy Bostjancic said the report was a weaker showing than the “muted gains” expected even when inclement weather and a recent nurses’ strike were factored in. Investors have largely focused on inflation risks from the war since US-Israeli strikes that began a week ago triggered Iranian retaliation. But “the last look at the labor market ahead of the start of the conflict suggests the labor market was not as strong” as in January, Bostjancic said. The longer the war continues, the more “negative feedback” could emerge, she cautioned.
– ‘Alarm bells’ – Navy Federal Credit Union chief economist Heather Long added that “the unemployment rate ticked up for the wrong reasons” in February, with more people becoming unemployed. She said, “This is backsliding and will raise alarm bells at the Federal Reserve.” Although one month’s figures do not make a trend, the numbers add to worries about the employment market, which previously helped to prop up household spending.
Already, the Fed cut interest rates thrice last year as the jobs market weakened, before pausing in January to assess the situation. February’s figures could bolster the case for the central bank to resume cuts to shore up the economy, rather than keeping them higher to tackle persistent inflation. But Long believes that the Fed is about to face conflicting pressures from “a hurting labor market and ‘warflation’ coming from the war in Iran as energy and food prices rise.”
For now, employers appeared “far more restrained in their hiring plans as the month began,” said Ger Doyle, regional president for North America at ManpowerGroup. He said the overall picture shows a “cautious” labor market where employers are adding roles where they must — but waiting for clearer economic signals before broadening their hiring plans.
– Beiyi SEOW
© 2024 AFP
