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Employment: Back-To-Back Strong Months Start 2020, Despite Virus

March 6, 2020

Bottom Line: Job gains were stronger than expected in February for the second month in a row. Construction gains were strong amid unseasonably better weather in parts of the country, and manufacturing jobs rebounded. While it is too early to see any impact from the coronavirus, there were declines in retail trade and wholesale/transportation services, sectors that would likely see the earliest impact. Leisure and hospitality, though, were particularly strong. Health services saw strong growth. Wage gains were slightly better than expected with average hourly earnings growth continuing to hover near 3%. Finally, the unemployment rate fell back down after last month's small bounce as the labor force participation ratio held nearly steady. Overall, this was another solid report on the labor market.

Payroll Employment rose by 273k in February, compared with market expectations for an increase of 165k. The prior 2 months were revised, higher in January by 48k and higher in December by 37k.

Government jobs ROSE by 45k. Consequently, private sector jobs ROSE by 228k. Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,409k jobs have been created.

  • In February, the job gains were in Trade, Transportation & Utilities (-6k with -7k of those in Retail Trade),
  • Professional & Business Services (+41k with a slip of 3.3k in Temp Help Services),
  • Education & Health Services (+57k),
  • Leisure & Hospitality (+51k),
  • Government (+45k),
  • Construction (+42k),
  • Financial Activities (+26k),
  • and Manufacturing (+15k).

The Unemployment Rate FELL by 0.1 percentage points in February to 3.5%, compared with market expectations for a small decline to 3.5%.

Household employment rose by 45k while the labor force declined by 60k, resulting in a decrease in the number of unemployed of 105k.

The Labor Force Participation Rate was UNCHANGED at 63.4%. The Employment-Population Ratio FELL by 0.1 percentage points to 61.1%.

The number of people Working Part-Time for Economic Reasons ROSE by 134k to 4,225k. while Long-Term Unemployment FELL by 64k to 1,102k (accounting for 19.0% of the unemployed), while the Mean Duration of Unemployment FELL by 1.0 weeks to 20.9 weeks.

There are now 5.8 million people officially unemployed. In addition, there are another 4,962k people who say they want a job but are not currently looking for one. Finally, another 4,225k people are working part-time because of slack economic conditions.

The Index of Aggregate Hours/strong> ROSE by 0.5%, combining the modest gain in private payroll employment and the longer workweek.

Hourly Earnings ROSE by 0.3% in February, above market expectations of 0.3%. Hourly earnings are now 3.0% ABOVE their year-ago level.

Weekly Earnings also ROSE by 0.6%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 3.0% ABOVE their year-ago level. The Average Workweek ROSE by 0.1 to 34.4 hours, ABOVE the market consensus at 34.3 hours.

Article by Contingent Macro Advisors