03.08.2019
Nonfarm employment barely grew in February adding a scant 20000 jobs far less than expected after adding 311000 and 227000 in January and December respectively. Yet the unemployment rate decreased to 3.8 percent and hourly wages posted their best annual gain in nearly a decade. Nonfarm employment is based on a survey of employers while unemployment is drawn from a household survey. In recent months results from these two surveys had moved in opposite directions—strong employment gains but rising unemployment. February’s results provide some correction to this divergence. Both of these broad measures were likely affected by the partial Federal government shutdown and severe weather.
Averaging over the last three months results in a solid 186000 job growth which amounts to double its underlying demographic trend. (Approximately 100000 people enter the labor market each month.)
While a wide range of industries posted growth in January these same industries sharply slowed in February with several sectors losing jobs. Employment in construction declined by 31000 in February offsetting a 53000 increase in January; education lost 18000 workers; and transportation and warehousing retail trade mining and government also shed employment. Job gains occurred across other sectors in February including professional and business health care wholesale trade. and manufacturing. Professional and business added 42000 jobs health care gained 21000 jobs wholesale trade added 11000 jobs and manufacturing gained 4000 jobs.
Despite limited nonfarm jobs growth the unemployment rate decreased to 3.8 percent in February from 4.0 percent in January. Among the unemployed the number of job losers and person who completed temporary jobs (including people on temporary layoff) declined by 225000. This decline reflects in part the return of federal workers who were furloughed in January due to the partial government shutdown. During the month the labor force participation rate remained steady at 63.2 percent. The employment rate—or employment-to-population ratio (EPOP or the percentage of adults with jobs)—remained steady as well at 60.7 a high for the recovery.
The tighter labor market is showing some dividends in wage growth. The average hourly wage is up 3.4 percent over the last year; over the last three months (December January and February) the annualized rate was up 3.3 percent. With the core rate of inflation at 2.2 percent increased hourly wages translate to modest real wage gains.
In sum this is a mixed jobs report. The pace of job growth that began eight years ago is continuing with the economy adding a total of 2.5 million jobs over the past twelve months. This growth rate is pulling more workers into the labor market which is now tight enough to produce real wage gains. Finally these latest numbers come with an asterisk. Payrolls were likely distorted by the effects of the government shutdown and severe weather and these numbers are likely to be revised upward. Whether this report signals a slowing economy will need at least another month of data.
The full BLS press release on the February 2019 employment situation can be accessed in the link below:
The next employment situation report for March 2019 will be released on Friday April 5 2019.
