This morning’s Bureau of Labor Statistics (BLS) data show that U.S. employers hired 273,000 additional workers in February on net, confirmation that employment growth remains solid. The unemployment rate dropped slightly to 3.5%, while the labor force participation rate held steady. Nominal wages rose only 3.0% over the year, continuing to demonstrate some weakness after accelerating through early 2019.

On the whole, relatively strong employment growth and slower wage growth than expected in an economy that has had historically low unemployment suggests that slack remains in the labor market. Workers are continuing to get pulled off the sidelines, but employers aren’t feeling much pressure to raise wages to attract and retain the workers they want.

Manufacturing—the first sector expected to feel the effects of any supply chain disruptions because of COVID-19—rose by 15,000 jobs in February. The reference period for this month’s data collection was too early in February to see the expected impacts of COVID-19 in the data at this time. Leisure and hospitality continued to rise in February, but may take a hit in coming months as COVID-19 spreads. In other sectors, retail trade saw mild declines while education and health services saw sustained growth. Government employment rose 45,000 jobs in February; 7,000 jobs added because of the hiring of temporary workers for the 2020 Census. As I mentioned yesterday, I’ll be watching key sectors for the effects of the coronavirus. The delay in inputs will likely impact manufacturing and even construction in next month’s release.