Chef Alessandro Pirozzi, from Alessa through Chef Pirozzi, brings a delivery food order to an outdoor table at the Promenade on Forest in Laguna Beach, California on Wednesday, January 13, 2021.
Paul Bersebach | Register Orange County via Getty Images
The surprisingly strong job growth in February indicates that the economy may be at a pivot and on the verge of entering a rent.
The economy added 379,000 jobs, well above the 210,000 expected, most of which in leisure and hospitality hit the sector hardest when the economy suddenly closed a year ago.
Economists say it would not be surprising to see more than 500,000 jobs growing now.
Equity futures contracts increased on the report, and bond yields rose. The ten-year treasury yield, which is moving opposite price, returned to a recent high of 1.61% before falling back to around 1.57%. The ten years started the year just over 0.9%.
“This is very similar to other economic data we are starting to see,” said Michael Arone, chief investment officer of State Street Global Advisors.
“The labor market has deteriorated, and it has now started to catch up,” he said. “It was great to see all the benefits of hospitality and hospitality, because the pandemic has started to subside a bit and restrictions are being lifted.”
“The numbers are trending the right way,” Arone added. “The labor market was the only procrastination. … Spring is upon us. You have it and you have the vaccination of vaccines.”
Green shoots in spring
Strategists expect the economy to grow by about 6% this year, aided by the introduction of vaccines, reopening and fiscal stimulus.
“I think we’ll see bigger numbers if we go in the spring and summer,” said Diane Swonk, chief economist at Grant Thornton. She expects stronger profits as people regain the ability to get together more safely.
“It’s still a long way to go, given the loss we lost, but the good news is that we need to see strong job gains,” Swonk said.
Economists are optimistic about the recovery, but remain concerned that variants of the virus could delay it.
The power of employment also feeds both sides of the debate on the need for the $ 1.9 billion stimulus package adopted by the House and is now being considered by the Senate.
For Swonk, the February data show that the stimulus package approved in December was needed to drag the economy out of a trough.
Job losses in December were revised from 227,000 to 306,000. The January profits were revised from 49,000 to 166,000. Individuals received $ 600 stimulus checks in the first days of January.
Swonk said the economy is still declining by 9.5 million jobs.
Leisure and hospitality jobs grew by 355,000 in February, with 80% of those in restaurants and liquor businesses. Yet employment in the field is 3.5 million lower over the year.
The health care industry added 46,000 jobs, but health care and social assistance declined by 909,000 jobs during the year.
“December was really a train wreck,” Swonk said, noting that there were a lot of job losses and a huge drop in consumer spending.
However, the February report indicates a turnaround.
“This is good news,” says Swonk. “It highlights the important role that stimulus played in derailing a more important downward spiral, which we have seen abroad in other countries.”
“We repelled a double dive,” she said.
But Arone said the market was worried about the next stimulus package, much larger than the $ 900 billion in December, which would overheat the economy and create inflation.
“The economic numbers in the last week or two have been really strong,” he said.
“I think it’s in need of another $ 1.9 billion?” Arone said: “We’re going to throw more gas on the fire, and with that $ 1.9 billion, that’s what the market is concerned about.”
He expects the economy to continue to heal, and job growth to pick up.
“I think there’s a huge pent-up question,” he said. “I think that’s what people are describing all year, with a very easy monetary policy, very easy fiscal policy.”
“With the reopening of the economy, the spread of vaccines and the epidemic that is behind us, I think you can have a real outburst in terms of economy, labor market and [corporate] earnings over the next nine months or so, ”he added.