According to today’s Jobs Report from the U.S. Bureau of Labor Statistics, the economy added 379K jobs in February, beating expectations. That is a significant improvement over January, when the economy added only 166K. It is also about twice the average monthly job gain before the pandemic.
Nevertheless, given that the economy is still down 9.5 million jobs since a year earlier—and 11.9 million jobs below its healthy pre-Covid trend—the job gains should be seen as fairly modest. They do not yet signal a rapid rebound, but rather the slow reawakening of the labor market after the Covid-19 winter.
Here are some key takeaways from the report:
1. The leisure and hospitality sector is finally reviving after a difficult winter.
Before the pandemic, about 11% of workers were employed in the leisure and hospitality sector, which includes hotels, restaurants, spectator sports, theaters, and museums. But the sector is a much larger share of the economy in some states, like Nevada, where it typically accounts for 25% of employment. And it was responsible for a disproportionate share of the job losses at the start of the pandemic—37%.
As of the February jobs report, it is still down 3.5 million jobs, or 20%, year-over-year. But, encouragingly, it was responsible for the vast majority of the job gains that month—355K of the 379K economy-wide total. The gains were concentrated in the following industries:
- Restaurants: +286K
- Hotels: +36K
- Entertainment: +33K
Even though the gains were heavily concentrated in one sector, more industries across the economy contributed job gains than losses overall, which is an encouraging sign that a modest jobs recovery is resuming more broadly.
2. Very few workers returned to the labor market.
The labor force expanded by only 50K, and is still 4.2M smaller than it was a year earlier. Many Americans clearly do not yet feel comfortable returning to work and many face barriers to doing so, such as continued school closures and reduced public transportation. The decline has been uneven, with the white male labor force contracting 2.2% in a year but the Hispanic female labor force contracting 4.4% and the Black female labor force contracting 5.6%.
3. State and local government education were the weak point of the report.
Even before the February report, employment in the education sector had tumbled, with year-over-year employment changes ranging from -25% in sports and recreation instruction to -6% in elementary and secondary schools. Instead of leading the recovery or cushioning the job losses in other industries, state and local government education departments shed yet more jobs in February.
There is a risk that reduced education budgets, staffing cuts, and school closures could cause long-term scarring in the labor market in the form of reduced skills and productivity, increased dropout rates, ballooning student debt levels, and youth mental health problems. Making up for the recent disruptions to education by restoring access and quality will need to be a key priority in the coming months.
4. More recent real-time economic data are highly encouraging and point to recent acceleration in the jobs recovery.
Job postings on ZipRecruiter in one month are a strong predictor of hiring and job growth the following month. Job postings were essentially flat in January, so we expected the February report to show only modest gains. But postings jumped 18% in February, and are now 15% above their pre-Covid peak. And that is a strong sign that hiring is picking up at this very moment.