February jobs report driven by surge of hiring at restaurants, bars

U.S. job growth came in stronger than expected in February, boosted by a flurry of hiring at bars and restaurants.

Employers added 311,000 jobs in February, the Labor Department said in its monthly payroll report released Friday, easily topping the 205,000 jobs forecast by Refinitiv economists. It marked the second straight month of hotter-than-expected job data after the economy added 504,000 positions in January, a total revised from an initial report of 517,000.

The unemployment rate unexpectedly ticked higher to 3.6% as the labor force grew.

"Job creation was heavily tilted toward the service sector again last month, with nearly one-third created in the lower-wage leisure and hospitality sector," said Jim Baird, Planet Moran Financial Advisors CIO. 

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"Those jobs had been slower to return in the early stages of the recovery as consumer spending was heavily tilted toward goods and social distancing measures restrained travel."

Job gains were concentrated in the leisure and hospitality sector, the hardest hit by the COVID-19 pandemic, and the industry brought on 105,000 new workers in February. 

Bars and restaurants accounted for the bulk of those gains, adding 69,900 workers last month. Hotels saw payrolls grow by 14,400, while amusement, gambling and recreation businesses brought on 12,900 new workers.

Employment in the leisure and hospitality industry still remains about 410,000 — or 2.4% — below its pre-pandemic levels. 

The burst of hiring by bars and restaurants, which tends to include more lower-paying jobs, could be one reason for the decline in pay last month, according to Baird. Monthly wages rose at the slowest pace in a year, with average hourly earnings growing 4.6% from a year ago, below an estimate of 4.8%. 

The monthly increase of 0.2% also was below the 0.4% estimate.

"The fact that such a large portion of the new jobs created were lower-wage positions may help to explain the moderation in wage growth at the margins," Baird said.

Other notable job gains in February were in construction (24,000), health care (63,000), local and state governments (46,000) and retail (50,000).

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Those increases helped to make up for declines in the information industry, which fell by 5,000 in January. The losses stemmed from a decline in truck transportation and ground passenger transportation, according to the report. 

The information sector also shed 25,000 positions in February, which included losses in the motion picture and sound recording industries and publishing.