Economists were looking for moderate slowdown for growth in February but the actual number delivered a huge downside miss. Hiring at US companies virtually ground to a halt last month, rising just 25,000 – a dramatic fall from January’s blowout 308,000, the Labor Deparment reports.

The extreme month-to-month shift clearly reflects a high level of noise in the data – unusually so. But while today’s hefty downshift is rare, it’s not unprecedented. In September 2017, payrolls nearly dried up, rising a tepid 16,000; a similarly snail’s-pace gain was posted in May 2016, when just 8,000 new jobs were added. As we now know, both events turned out to be anomalies of no relevance for the generally healthy growth trend in the labor market. Is it different this time?

Unclear, which is always true whenever an economic report suddenly falls from grace until additional numbers confirm (or reject) the volte-face. One reason for remaining cautious before ringing the macro alarm bell: the one-year-growth trend for private payrolls, although mildly dented after today’s release, remains healthy.

Employment rose 1.9% last month from the year-ago level. That’s down from January’s 2.2%, but a 1.9% growth trend continues to rank as a solid pace. Nonetheless, it’s reasonable to wonder if the recent re-acceleration in growth for payrolls has peaked and a slow decline is now baked into the future. Today’s results surely tip the odds in that favor, if only on the margins.

There are other reasons to think that the labor market is headed for softer growth in the foreseeable future, including signs that US GDP growth in this year’s first quarter is on track to slow… again. As discussed earlier this week, several nowcasts for Q1 show that the economy will continue to decelerate in early 2019.

Meantime, the Capital Spectator’s business cycle analysis also reflects an ongoing slowdown in the macro trend. But as noted last month, the key question boils down to:

Is the economy suffering from a soft patch that will stabilize or give way to reacceleration or are we in the early stages of an approaching recession? At this point it’s too early to know which scenario will unfold.

Recession risk is still low, although the case for softer growth is strengthening. For the moment, there’s a distinction. Deciding when/if that distinction fades is a work in progress. But for now, a broad set of indicators, including today’s employment report, suggest that slower growth will prevail… until incoming numbers deliver a good reason to think otherwise.

“There’s no reason to panic,” Ryan Sweet, head of monetary policy research at Moody’s Analytics, tells Bloomberg. “You average the couple months together and the jobs market is still doing well. Job growth will slow this year, as the economy begins to moderate. But 20,000 jobs is not what we’re going to be creating month-in and month-out.”

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