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Friday, March 09, 2018

Comments on February Employment Report

by Calculated Risk on 3/09/2018 11:20:00 AM

The headline jobs number at 313,000 for February was well above consensus expectations of 205 thousand, and the previously two months were revised up a combined 54 thousand.  Overall this was a very strong employment report.

There was probably a boost from weather in February. According to Chicago Fed economist Francois Gourio: "February was significantly warmer than usual - positive weather effect in today's NFP of about 80k according to our state model". Even if weather boosted the NFP report by 80,000 jobs, this was still a strong report. If weather was a factor, we might see some payback in the March report.

Earlier: February Employment Report: 313,000 Jobs Added, 4.1% Unemployment Rate

In February, the year-over-year employment change was 2.281 million jobs. This has been generally trending down, but is still solid year-over-year growth.

Average Hourly Earnings

Wage growth was disappointing in February, and hourly wages for both December and January were revised down. From the BLS:

"In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent."
Wages CES, Nominal and RealClick on graph for larger image.

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 graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.6% YoY in February.

Wage growth had been trending up, although growth has been moving sideways recently.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut or because they were unable to find full-time jobs."
The number of persons working part time for economic reasons has been generally trending down, however the number increased in February. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 8.2% in February.

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.397 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.421 million in January.

This is the lowest level since April 2008.

This is trending down, but remains a little elevated.

The headline jobs number was strong, and the unemployment rate unchanged at a low level, overall a very strong report.