Today’s employment report from the Labor Department showed that job growth slowed in February, but not enough to raise serious doubts that the economy is doomed to stumble in the immediate future. Private-sector payrolls rose 233,000 last month. That’s down from January’s 285,000 gain, but it’s strong enough to keep hope alive that growth generally will prevail for the foreseeable future.

If we strip away the monthly variation, the year-over-year percentage change in private job growth looks quite a bit better with a 2.07% annual advance, or just a hair below January’s 2.10% gain over the year-earlier month. By that standard, we haven’t seen private sector payrolls rising at recent levels (2.1% a year) since 2006.

Admittedly, payrolls aren’t a reliable early warning indicator of new recessions. But if there’s a new downturn lurking, as some analysts insist, we should see confirmation soon in the payrolls data. For the moment, expecting cyclical darkness based on the trend in jobs growth is a stretch.
“The labor market has found its legs in the last few months, and it looks like there’s enough of a broad base that the momentum can be sustained,” says Julia Coronado, chief economist for North America at BNP Paribas. Patrick O’Keefe, director of economic research at J. H. Cohn, goes even further and asserts that “we’re at what I think we could characterize as escape velocity. The jobs recovery will finally have achieved the momentum that is necessary.”
Maybe, but there’s more work to be done. As I’ve been discussing for some time now, a sustained rise in job growth is necessary if there’s any hope of slowing the deceleration in personal income and spending growth, which currently signals trouble ahead. If the ongoing bout of job creation can salvage this descent, we should see some evidence soon (the February update for spending and income is scheduled for March 30).
Even if you buy into the idea that job growth will roll on at decent if not especially strong levels, there was disappointment that the official unemployment rate was unchanged last month at 8.3%. What’s more, some economists question if the previous decline (unemployment was 9.0% as recently as last September) is accurate. As Reuters reports today:

Several Wall Street economists believe the government is mismeasuring seasonal shifts in the labor market, and suggest the jobless rate’s sharp winter drop was partly an illusion….

“We think that the improvement over the last few months dramatically overstates the underlying improvement,” said Andrew Tilton, an economist at Goldman Sachs in New York.

Regardless, there’s no recovery or any chance of avoiding a downturn if job growth stumbles. For the moment, that risk continues to look minimal. But we’re still holding our breath, one month at a time. After fours years of practice, we’re under no illusions that this is about to change any time soon.