March 3rd, 2016 3:27 PM by Chris Styner
By Mark Hamrick · Bankrate.com
The February jobs report will show how deeply bottoming oil prices has affected the U.S. labor market. Image courtesy Dan Bannister/Getty Images
The February jobs report due from the Labor Department tomorrow will give us a fresh indication as to whether the U.S. economy is being slowed down by a combination of rock-bottom energy prices and market turbulence overseas.
The oil industry, previously an engine of growth for the U.S., is now a negative thanks to oil prices that have dipped below $35 in recent weeks. Manufacturing is struggling because of economic weakness abroad. But so far, despite these challenges, the U.S. economy has continued to grow.
“It seems the labor market is not charging forward but rather cautiously advancing,” says Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness.
While fears of a recession are on the rise, most experts believe the nation will avoid an outright prolonged contraction this year.
The U.S. has added an average of 221,000 jobs a month over the past year. We will probably need some luck to hit that number for February in the upcoming jobs report. But the job market has been adding enough jobs, all these many years into the recovery, to produce further improvement.
“The economy added a well-below-trend 151,000 jobs in January, but this is more than sufficient to keep pace with growth in the working-age population, which requires adding around 100,000 jobs per month,” says economist Ryan Sweet, a director at Moody’s Analytics.
While many economists regard the unemployment rate, at 4.9%, as historically low, most people would probably agree that the job market has plenty of room to improve.
One gauge of the nation's manufacturing sector, the Manufacturing ISM Report on Business, shows that manufacturing contracted (more serious than a slowdown) in February for the 5th consecutive month.
The forces behind that contraction are complex. One issue is currency; while we might tend to celebrate a strong dollar in that it reflects the relative strength of the U.S. economy, it has the negative effect of making U.S. produced goods and services more expensive when sold abroad.
Faltering economies in Japan, Europe and China have weakened foreign currencies, which has, in turn, driven up the relative value of the dollar, and that trend is unlikely to reverse in the near future.
In last month's report, the Labor Department told us that average hourly earnings have risen 2.5% over the past year. That's an improvement, but not enough to give Americans a broad sense that they're faring better.
Indeed, frustration over slow wage stagnation may be a contributing factor in the success of "outsider" candidates in this election cycle, particularly Donald Trump, who scored several big victories in this week's "Super Tuesday" primary contests.
In a February Pew poll, more than half of those who are Republican or lean Republican agreed that the U.S. economic system unfairly favors powerful interests, and 73% of Democrats and those who lean Democratic agreed.
This will be the last employment report before the March Federal Reserve meeting, where central bankers must make a decision on whether or not to raise short-term interest rates once again.
In our latest Bankrate Economic Indicator survey, most of the economists we surveyed say the Fed will likely keep rates steady at the March Federal Open Market Committee meeting. They cited a number of factors, including the volatility in global financial markets, weakness abroad and the fear that a further rate hike would boost the value of the already-strong dollar as reasons the Fed may hold back. If the jobs market does slow substantially this year, another Fed rate boost could be pushed further into the future.