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‘It is still too early to get excited’ about the jobs numbers: Analysts

Ethan Wolff-Mann
·Senior Writer
·3-min read

February’s jobs report released Friday smashed expectations.

The U.S. added 379,000 new non-farm jobs to payrolls in February, eclipsing a forecast of around 200,000. January's numbers were also revised upwards to 166,000 and the unemployment ticked down from 6.3% to 6.2%.

This is no doubt good news, especially for the hospitality industry which has been brutally hammered by the virus and measures to fight it.

Stocks surged at the open after the report’s release on Friday, but analysts were quick to point out that this is but one step on a long journey back to labor market normalcy.

"At this pace, it will take about four and a half years to get back to where the labor market would have been without the pandemic,” Indeed’s economic research director Nick Bunker wrote in a research note circulated Friday morning. “Millions of Americans out of work do not have that time."

Other analysts, like Morgan Stanley’s U.S. economics team similarly pushed a narrative that highlighted the road in front rather than the progress behind.

“More progress than expected was made in the labor market recovery last month, and there remains easy fuel for strong payroll gains in coming months as the reopening gains momentum,” the team wrote in a note. “But as Chair Powell has stressed, there is much further to go before conditions are consistent with maximum employment.”

February was a “pleasant surprise, but it is still too early to get excited,” wrote Bunker.

“Expectations, he pointed out, were pretty poor all things considered: the U.S. has 9.5 million fewer jobs than it did before the coronavirus pandemic hit the U.S. last year,” he wrote.

Comparing things to the last financial crisis in the worst months of the Great Recession makes that horrible time actually look mundane. Now, after all the healing, is similar to the levels seen then.

“The prime-age employment-to-population ratio is the best way to see the damage. The share of the prime-age population with a job has fallen by 3.9 percentage points from a year ago,” Bunker wrote. “Similarly, it will take years to get back to pre-pandemic levels on this front.”

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As Indeed sees it, progress is happening — there’s just a lot more to be done. “The labor market is moving forward, it just needs to speed up,” Bunker said.

An opposing view: Don’t worry about the pace, it’s going to accelerate

Some are more optimistic than Bunker, and see the future providing just the acceleration needed. Pantheon’s Ian Shepherdson wrote Friday he expects the numbers to do just that, provided Covid variants don’t get out of control.

“The monthly gains are likely to rise sharply unless a renewed surge in Covid cases, due to the B117 variant, forces states to delay their re-openings until vaccination finally squashes it,” he wrote. “Our base case, though, is that March could easily see a 1M payroll gain.”

Renaissance Macro’s Neil Dutta urged people to “ignore anyone that says something like, ‘At this rate it will take us until XX to get back to where we were,’ calling out exactly the kind of perspective taken by Bunker.

“We are going to see a seven-figure jobs number at some point in the next few months. Bank on it,” Dutta wrote.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.