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Jobs Blowout Estimates: 379K, Big on Leisure & Hospitality

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Friday, March 5, 2021

New nonfarm payroll numbers are out this morning, and they are emphatic: 379K new jobs were filled in the month of February, according to the U.S. Bureau of Labor Statistics (BLS), well ahead of the 210K expected. January’s headline revision more than tripled to 166K. The Unemployment Rate hits an 11-month low at 6.2%.

In short, this is a great jobs report — far beyond what was projected from Wednesday’s 117K private-sector jobs. In this report, private sector employment grew by an eye-opening 465K, augmented by losses in government employment, including at the state and local levels. The Labor Force Participation Rate was steady at 61.4%, and the U-6 number (aka “real unemployment”) is less flattering, at 11.1.

The big story comes from the Leisure & Hospitality segment of the economy, which grew by 355K — clearly signaling a post-Covid (or close to it) outlook for the U.S. economy. Even at this outsized number of new positions filled, this industry was badly bruised in 2020 and has yet to fully recover. Then again, we’re not completely out of the pandemic woods yet; plenty still needs to happen to keep mutating strains of the coronavirus from impacting the social aspects of society.

Goods-producing jobs lost 48K in the month, which is one figure more aligned with the ADP (ADP - Free Report) findings earlier in the week. The gains by industry otherwise were in Education/Healthcare, +44K, and Retail’s latest bounce-back, +41K. This looks like the result of the December stimulus package having made its way through, with another big relief bill forthcoming in the next week or so. This would serve to throw flames on the spark of growth we’re already seeing, making for a big boom in the economy upcoming.

It’s also something of the cork popping in the labor market: in the final two months of 2020, jobs totals were revised drastically down. The trailing three-month average of new nonfarm payroll jobs is 106K, a much less gaudy number of labor force exuberance. And any new outbreaks shifting Covid cases back up toward levels seen at the start of the year might have a downward impact due to delays in the Great Reopening, near term.

But it’s the fifth straight Unemployment Rate with a 6-handle. Back in April of last year, this print shot up to 14.8%, and has steadily come down since. The plateau we’ve seen over the past half-year or so — which also has to do with a small percentage of the workforce dropping out again — may shift another leg lower once this reopening manifests. Forecasts for growth in 2021 were already good; let’s see how much more favorable certain calculations become if the steady control of Covid continues.

And, after a week of market-trading malaise, especially on the Nasdaq, we’re seeing indexes higher this morning — and notably so. The Dow looks to open up 240, the Nasdaq +50 and the S&P 500 +25. This wouldn’t be enough to push the week’s trading to positive territory all by itself, but if some of the tech-growth money had been taken off the table over the past few weeks, perhaps we’re seeing it being put back into cyclicals, including those tech behemoths that are now much bigger than mere growth plays. Watch this space.

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