The U.S. Labor Market Report covering the national employment situation in February showed stronger than expected gains that were accompanied by a small uptick in wages. The labor market added 295,000 jobs last month and the unemployment rate dropped to 5.5%. After increasing by twelve cents in January, average hourly earnings on private nonfarm payrolls increased by three cents to $24.78 in February. Over the year, average hourly earnings were up by 2.0%, well ahead of inflation and thus boosting real wages and consumer spending power.
The employer payroll survey reported that total nonfarm employment in the United States increased by 295,000 jobs in February. The December employment figure remained unchanged, but November employment was revised down from 257,000 jobs to 239,000. Job growth has averaged 288,000 jobs over the last three months. February was also the twelfth consecutive month where job gains topped the 200,000 mark.
On a year-to-year (YTY) basis, U.S. employment expanded by nearly 3.3 million jobs, an increase of 2.4%. With the exception of mining and logging, every major industry sector including government added jobs over the year, an indication of a stronger and more diverse economy. The fastest growing sectors were construction (5.3% or 321,000 jobs); transportation and warehousing (4.2%, 192,200 jobs); administrative and waste services (3.8%, 322,700 jobs); leisure and hospitality (3.6%, 527,000 jobs); and professional and technical services (3.6%, 296,400 jobs). The manufacturing sector continues to grow as well – jobs in durable goods were up by 2.6% or 195,000 jobs, while employment in nondurable goods edged up by 0.3% or 13,000 jobs.
The unemployment rate fell to 5.5% last month from 5.7% in January, which is very close to what many economists consider to be full employment. However, 178,000 individuals left the labor force causing the labor force participation rated to tick down 0.1 percentage point to 62.8%. Since only individuals in the labor force are used to calculate the “headline” unemployment rate, a decline in the labor force will result in a lower unemployment rate, which was partially the case last month; but he unemployment rate continues to fall because the economy has been creating over 200,000 jobs per month over the last year. This last time the economy experienced job growth of this magnitude was back in the late 1990s.
While job gains and a declining unemployment rate point to steady improvement in the labor markets, indicators of underlying distress have also made significant gains. The more comprehensive U-6 unemployment rate, which counts part-time workers who would prefer full-time work and persons who would like to work but have given up looking for a job fell to 11.0% from 12.6% a year ago.
Also encouraging, as of February, someone who is out of work would need a little over 13 weeks to find a new job. A year ago it would have taken over 16 weeks. Improvements in the labor market have also helped to bring down the share of workers who have been jobless for 27 weeks or more. In February that share was 31.1% versus 36.8% in February 2014 (not counting individuals who have given up looking for work). Over the year, the number of long-term unemployed persons has fallen by nearly 1.1 million. Since 1990, the percentage of long-term unemployed has averaged 25%, reaching as high as 45% in 2010.
Summary: February was another month of solid, broad-based job, and sustained growth – good news for the economy. The gain in manufacturing jobs and the number of production hours worked was an indication of improving industrial production. There was a loss of 8,000 jobs in the mining sector, mostly in oil and gas extraction, a consequence of declining oil prices. While bad for the energy sector, the net impact of the decline in energy prices has proven to be more than sufficient to offset those losses and provide an overall boost to the economy.
Source: http://www.bls.gov/news.release/pdf/empsit.pdf
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