Job Report Shows Solid February Gains
Total nonfarm payroll employment increased by 242,000 in February, while the unemployment rate remained unchanged at 4.9 percent, the Bureau of Labor Statistics reported Friday.
BLS revised total nonfarm payroll employment for December from +262,000 to +271,000 and January from +151,000 to +172,000. With these revisions, employment gains in December and January combined were 30,000 more than previously reported. Over the past three months, job gains have averaged 228,000 per month.
The report said the number of unemployed persons, at 7.8 million, was unchanged. Over the year, the unemployment rate and the number of unemployed persons fell by 0.6 percent and 831,000, respectively. Long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.2 million in February and has shown little movement since June. These individuals accounted for 27.7 percent of the unemployed.
The employment-population ratio edged up to 59.8 percent over the month, while the labor force participation rate edged up to 62.9 percent. Both measures have increased by 0.5 percentage point since September.
“The solid rate of job growth and modest increase in average hourly earnings over the past year look to be pulling workers who have struggled most with the slow rate of recovery back into the workforce,” said John Silvia, chief economist with Wells Fargo Securities, Charlotte, N.C. “The number of discouraged and other marginally attached workers continues to edge lower, which helped to drive down the broadest measure of joblessness to a new cycle low.”
BLS reported the average workweek for all employees on private nonfarm payrolls declined by 0.2 hour to 34.4 hours in February. The manufacturing workweek was unchanged at 40.8 hours, while factory overtime was 3.3 hours for the third straight month. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down by 0.1 hour to 33.7 hours.
Wages also declined. BLS reported average hourly earnings for all employees on private nonfarm payrolls declined by 3 cents to $25.35, following an increase of 12 cents in January. Average hourly earnings have risen by 2.2 percent over the year. Average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $21.32.
“The unemployment rate at 4.9 percent is consistent with rising wage pressures,” Silvia said. “Sectors such as information and finance reported above average wage gains over the past year and may well reflect a shortage of skilled workers available. Average hourly earnings in the retail and leisure & hospitality industries have also been strong, but may reflect the increase in the minimum wage for those groups.”
Silvia noted since 2013 and 2014, the employment cost index has trended upward, while productivity gains remain very modest at best. “For the economy, this will put further pressure on corporate profit growth and further limit companies’ willingness to invest and hire over time,” he said.
