by Bill McBride on 3/06/2015 09:45:00 AM
Friday, March 06, 2015
Earlier: February Employment Report: 295,000 Jobs, 5.5% Unemployment Rate
This was a very solid employment report with 295,000 jobs added, although job gains for January were revised down 18,000.
Unfortunately there was little good news on wage growth, from the BLS: "In February, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $24.78. Over the year, average hourly earnings have risen by 2.0 percent."
However I expect real wages to increase this year.
A few more numbers: Total employment increased 295,000 from January to February and is now 2.8 million above the previous peak. Total employment is up 11.5 million from the employment recession low.
Private payroll employment increased 288,000 from January to February, and private employment is now 3.2 million above the previous peak. Private employment is up 12.0 million from the recession low.
In February, the year-over-year change was 3.3 million jobs. This was the highest year-over-year gain since March '00.
Employment-Population Ratio, 25 to 54 years old
Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.
In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.
The 25 to 54 participation rate decreased in February to 81.0%, and the 25 to 54 employment population ratio increased to 77.3%. As the recovery continues, I expect the participation rate for this group to increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.
Average Hourly Earnings
This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.
The blue line shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth has been running close to 2% since 2010 and will probably pick up a little this year.
Note: CPI has been running under 2%, so there has been some real wage growth.
Part Time for Economic Reasons
From the BLS report:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in February at 6.6 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.The number of persons working part time for economic reasons decreased in February to 6.635 million from 6.810 million in January. This is the lowest level since September 2008. This suggests slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 11.0% in February from 11.3% in January. This is the lowest level for U-6 since September 2008.
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more.
According to the BLS, there are 2.709 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 2.800 in January. This is trending down, but is still very high.
State and Local Government
This graph shows total state and government payroll employment since January 2007. State and local governments had lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)
In February 2015, state and local governments added 7,000 jobs. State and local government employment is now up 138,000 from the bottom, but still 620,000 below the peak.
State and local employment is now generally increasing. And Federal government layoffs have slowed (Federal payrolls were unchanged in February).
Overall this was a very solid employment report.