U.S. employment growth nearly fully stalled in February, with the economy creating only 20,000 jobs, adding to signs of a sharp slowdown in economic activity in the first quarter.
The meager payroll gains reported by the Labor Department on Friday were the weakest since September 2017, with a big drop in the weather-sensitive construction industry. They also reflected a decline in hiring by retailers and utility companies as well as the transportation and warehousing sector, which is experiencing a shortage of drivers.
But the stumble in job growth, which followed two straight months of hefty gains, likely understates the health of the labor market as other details of the closely watched employment report were strong.
The unemployment rate fell back to below 4 percent and a wider measure of underemployment fell by the most ever. In addition, annual wage growth was the best since 2009, and the economy created 12,000 more jobs in December and January than previously reported, bringing the total for the two months to 538,000.
Still, the mixed report was another indication the economy, which in July will mark a record 10 years of expansion, is slowing and supports the Federal Reserve’s “patient” approach toward further interest rate increases this year.