The February Employment Report looks like a "weather" story: An unwinding of exaggerated job strength in the "warm" January and possibly a drag from snowstorms in February likely held down Payrolls. That said, a case can be made that the trend has slowed, as the average of Payroll gains was +166k over the past two months, down from +238k in 2018 and +233k in Q418.
The +20k m/m in February Payrolls reflected in part declines in sectors likely hurt by bad weather -- Construction, Retail, Education, Leisure, Transportation. Roughly, about 100k+ jobs might have been lost as a result. Normal volatility could have hurt these sectors and others, as well.
The decline in the Unemployment Rate to 3.8% argues against a sharp slowdown to below trend economic growth, however. At 3.8%, the Rate equals its average in Q318 and Q418. The decline in the Rate resulted from a rebound in Civilian Employment after it dropped in January -- both moves likely noise. The Labor Force Participation Rate was steady in print, but slipped slightly unrounded. It remained above the Q418 average (63.2% versus 63.1%), keeping alive the possibility that potential economic growth has risen.
Although Average Hourly Earnings jumped slightly more than expected (+0.4% m/m versus consensus of +0.3%), a weather-related m/m shift in job composition could have added to the calendar effect. Looking ahead, calendar considerations point to another high print of about 0.3% m/m, which would keep the y/y steady at a high 3.4%. But, this factor could be partly offset if there is an unwinding of the weather boost.
Note that the "warm" January could have contributed to the sharp rebound in January Housing Starts, as well. They should fall back in February, if weather, in fact, was partly responsible. The December-January volatility in Starts suggests that Monday's January Retail Sales could bounce too, after they plunged in December. It could take several months to get a clearer picture of the economy.
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