US jobs report: Hiring plunge and negative economic impact linked to Trump's government shutdown

Experts say businesses lost confidence amid president's border wall shutdown

New reports showing a sharp decline in hiring and only a slight dip in the US unemployment rate have been linked to Donald Trump’s government shutdown over the president’s demands to build a sprawling wall along the nation’s southern border.

Hiring tumbled in February, according to the latest government jobs report released this week, which showed US employers added just 20,000 jobs throughout the month.

The slowdown in hiring — February featured the smallest monthly gain in nearly a year and a half — does follow signs that US economic growth is slowing because of a weaker global economy, a trade war between the United States and China and signs of caution among American consumers. Those factors have led many economists to forecast weaker growth in the first three months of this year.

Last month, the unemployment rate fell partly because thousands of federal workers had been temporarily counted as unemployed in January during the partial government shutdown, which ended 25 January. Once these workers returned to their jobs, they were again counted as employed in February.

The shutdown, however, likely weighed on business confidence, and “may have made businesses more cautious about hiring into February,” Gus Faucher, chief economist at PNC Financial, told the Associated Press.

However, Mr Faucher noted the US labour market “is still in good shape,” adding, “Slower job growth was expected after huge average gains of better than 250,000 over the preceding four months. Job growth should bounce back in March and through the rest of this year.“

The sluggish hiring and job cuts in February were widespread across industries. Construction cut 31,000 jobs, the most in more than five years. Manufacturing added just 4,000, the fewest in a year and a half. Retailers cut 6,100. Job growth in a category that includes mostly restaurants and hotels were unchanged last month after a huge 89,000 gain in January.

The financial markets scarcely reacted to the report. The Dow Jones Industrial Average, which had been down before the jobs report was released at 8.30am EST, was off about 110 points in midmorning trading.

Meanwhile, home sales fell last year and price gains are slowing after the average rate on a 30-year mortgage reached nearly 5 per cent last year. Sales of new homes also cratered late last year before picking up in December. And US businesses have cut their orders for equipment and machinery for the past two months, a sign that they are uncertain about their customer demand.

The Associated Press contributed to this report