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Employment Situation: More Solid Gains With Modest to Moderate Wage Growth

March 9, 2018
Bottom Line: Job creation in February was significantly higher than expectations. Gains were broad-based with the prior months revised higher. The unemployment rate was unchanged with the labor force growing modestly. While the deceleration from 0.3% to 0.1% in average hourly earnings will grab headlines, this was not enough to changes the trend, which is towards modestly higher wages. Average weekly earnings rose 0.4% with the index of aggregate weekly hours in the private sector jumped 0.6%. Overall, this was a strong report showing strong job creation, an uptick in labor force participation and modest to moderate wage growth.

Payroll Employment rose by 313k in February, compared with market expectations for an increase of 205k. The prior 2 months were revised, higher in January by 39k and higher in December by 15k.

Government jobs ROSE by 26k. Consequently, private sector jobs ROSE by 287k.

Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,281k jobs have been created.

  • In February, the job gains were in Trade, Transportation & Utilities (+22k with 50k of those in Retail Trade),
  • Professional & Business Services (+50k with the addition of 26.5k in Temp Help Services),
  • Construction (+61k),
  • Manufacturing (+31k),
  • Education & Health Services (+29k),
  • Financial Activities (+28k), Government (+26k), and
  • Leisure & Hospitality (+16k).
  • Jobs were shed in Information (-12k).

The Unemployment Rate was UNCHANGED in February to 4.1%, compared with market expectations for a small decline to 4.0%. Household employment rose by 785k while the labor force increased by 806k, resulting in an increase in the number of unemployed of 22k.

The Labor Force Participation Rate ROSE by 0.3 percentage points to 63.0%. The Employment-Population Ratio ROSE by 0.3 percentage points to 60.4%.

The number of people Working Part-Time for Economic Reasons ROSE by 165k to 5,091k. while Long-Term Unemployment FELL by 24k to 1,397k (accounting for 20.8% of the unemployed), while the Mean Duration of Unemployment FELL by 1.2 weeks to 22.9 weeks.

There are now 6.7 million people officially unemployed. In addition, there are another 5,131k people who say they want a job but are not currently looking for one. Finally, another 5,091k people are working part-time because of slack economic conditions.

Hourly Earnings ROSE by 0.1% in February, below market expectations of 0.2%. Hourly earnings are now 2.6% ABOVE their year ago level.

Weekly Earnings ROSE by 0.4%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 2.9% ABOVE their year ago level.

The Average Workweek ROSE by 0.1 to 34.5 hours, ABOVE the market consensus at 34.4 hours.

The Index of Aggregate Hours ROSE by 0.6%, combining the solid gain in private payroll employment and the longer workweek.