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Employment: Another Remarkably Strong Labor Report

March 4, 2022
Bottom Line: The February jobs report showed even stronger labor gains than the January reports.  Moreover, there were upward revisions to hiring in prior months. Up 678k, gains were notably strong in the goods-producing sectors. Leisure and hospitality jobs were strong, as has been typical, but so too were job gains in health services. The household survey, which showed 548k new jobs, was a touch below the establishment survey but significantly stronger than the number of people re-entering the labor force, 304k, driving the unemployment rate down to 3.8%, a tenth below expectations. Average hourly earnings were the only miss in this report, flat versus expectations for 0.5%. However, much of that is due to the composition of workers being rehired, with many of the newest jobs being lower paying.  Overall, this was another remarkably strong labor report. Though probably not enough to change Chair Powell's message that the Fed would start are rate hiking cycle with 25bps at its meeting on March 16th, the hawks will have plenty of fodder to argue for 50bps.
Payroll Employment
rose by 678k in February, compared with market expectations for an increase of 125k. The prior 2 months were revised, higher in January by 14k and higher in December by 78k.
Government jobs ROSE by 24k. Consequently, private sector jobs ROSE by 654k.   Overall employment is now 4.6% ABOVE its year-ago level,  Over the past 12 months, 6,672k jobs have been created.
In February, the job gains were in:
  • Trade, Transportation & Utilities (+66k with 37k of those in Retail Trade),  
  • Professional & Business Services (+95k with the addition of 35.5k in Temp Help Services),  
  • Leisure & Hospitality (+179k),
  • Education & Health Services (+94k),
  • Construction (+60k),
  • Manufacturing (+36k),
  • Financial Activities (+35k), and
  • Other Services (+25k).
The Unemployment Rate FELL by 0.2 percentage points in February to 3.8%, compared with market expectations for a small decline to 3.9%.  Household employment rose by 548k while the labor force increased by 304k, resulting in a decrease in the number of unemployed of 243k.
The Labor Force Participation Rate ROSE by 0.1 percentage points to 62.3%. The Employment-Population Ratio ROSE by  0.2 percentage points to 59.9%.The number of people Working Part-Time for Economic Reasons ROSE by 485k to 4,105k. while Long-Term Unemployment ROSE by 11k to 1,702k (accounting for 27.1% of the unemployed),  while the Mean Duration of Unemployment ROSE by 2.0 weeks to 26.6 weeks. There are now 6.3 million people officially unemployed. In addition, there are another 5,355k people who say they want a job but are not currently looking for one.  Finally, another 4,105k people are working part-time because of slack economic conditions.
The Index of Aggregate Hours ROSE by 0.8%, combining the solid gain in private payroll employment and the longer workweek.
Hourly Earnings were flat in February, below market expectations of 0.5%. Hourly earnings are now 5.1% ABOVE their year-ago level.
Weekly Earnings ROSE by 0.3%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 5.4% ABOVE their year-ago level.
The Average Workweek ROSE by 0.1 to 34.7 hours, inline with the market consensus at 34.7 hours.

Article by Contingent Macro Advisors