Economy Adds 313k Jobs in February; Strongest Growth Since October 2016; Unemployment Rate remains 4.1%;

Highlights

  • Number of payroll jobs INCREASED 313,000 in February more than double the 154,000 growth in the working age population; Largest jobs gain in 19 months;
  • Prior month job totals REVISED UP net 54,000: UP 36,000 in January to a revised growth of 239,000 jobs (from 200,000) and UP 15,000 in December to a gain of 175,000 (from the last report of a 160,000 increase);
  • Average weekly earnings ROSE $4.06 to $922.88, a 3.1 percent year-year gain UP from December’s 2.7 percent year-year growth;
  • Unemployment rate in February remained at 4.1 percent;
  • Average hourly earnings GREW 4¢, in February a 2.5 percent increase after a 2.7 percent year-year boost in January;
  • Average weekly hours ROSE1 hours in February, to 34.5, reversing a decline in
  • Labor force – GREW 806,000 to 161.9 million as the number of persons NOT in the labor force DROPPED 653,000; labor force Participation rate increase 0.3 percentage points to 63.0 percent, back to where it was last September;
  • Employment-Population ratio also INCREASED 0.3 percentage points to 60,4 percent, matching last
  • Number of construction jobs INCREASED 61,000, with 25,000 new residential construction jobs;
  • Retail sector added 50,300 jobs – largest one-month increase in two years
  • Number of Leisure-hospitality jobs each INCREASED 16,000 in February including 11,500 food service slots;
  • Only industry sector to lose jobs was Information –which includes broadcasting and movie production – which shed 12,000 jobs (including a decline of 9,700 motion picture related jobs;

Trends:

  • The 3.1 percent (year-year) increase in average weekly earnings was the strongest since August 2010 (3.4 percent)
  • Three-month average increase in payroll jobs – 242,000 –was the strongest since June-July-August 2016, 262,000;
  • Number of new entrants to the labor force (as unemployed) was 704,000 in February, most since last April, 707,000
  • Unemployment rate has been at 4.1 percent for the last five months (since October)
  • Gain in construction jobs – 61,000 – was the largest one-month increase since March 2007 – 80,000 jobs;
  • Monthly increase in labor force was largest in more than three years (January 2015); the month-month decline in the number of persons not in the labor force was the largest in 10 years (January 2008, down 6784,000)
  • Unemployment rate for Blacks dropped back to 6.9 percent in February just above the record low of 6.8 percent recorded in December (rate had increased to 7.7 percent in January);

Data Source: Bureau of Labor Statistics

Image result for employment situation report

Perhaps the only bit of “bad” news from the February Employment Situation report is what it will lead to: a faster pace of increases to the target fed funds rate as government by the Federal Open Mark Committee.

Just about every statistical category in the report contained good news, unless you work in the movies, publishing or broadcasting as the information sector showed a 0.4 percent drop in jobs.

But with average weekly hours recovering from a January dip senind average weekly earnings up, the Trump Administration’s economic plan seems to be firing on all cylinders.

Indeed, even the tax code changes may have provided a boost as retail employment rose with the strongest gain in two years.

But all those gains could prove to be illusory.

Middle-class taxpayers could still see their tax bills rise in April 2019 when the full extent of the new tax law kicks in with the elimination of prized tax deductions. The impact of loss those deductions – particularly for state and local taxes — could be magnified as the report indicated government payrolls increased by 26,000 – even accounting for a 7,000 drop in the federal civilian jobs. Local governments added 30,000 jobs and state governments 2,000 – all paid for by state and local taxes.

Perhaps the biggest “downer” of the report was that the strong employment growth was not accompanied by an uptick in wages growth. The month-month increase in average weekly earnings was due not to an increase in wages, but an increase in the average workweek which fell in January due to the weather.

As has been the case the reason for slower growth in earnings in February was the low paying occupations – retail and leisure-hospitality – represented about one of every six new jobs. Higher paying occupations such as utilities (weekly earnings of $1,551.72), mining/logging ($1,302.46), information ($1,121.61) and construction ($1,091.66) accounted for almost the same share of new jobs, so the impact of the better paying jobs was effectively wiped out by the jobs with lower earnings.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.

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