We’ll continue to have updates as we make our way through the report, so keep checking back:
1) At a glance, a decent report, very close to expectations, and after upward revisions to December and January (each by close 30,000), here is what payrolls look like for the last six months:
(September still included some people who lost temporary jobs doing the census.)
That’s an average of 142,000 in the five months since the start of October, when the recovery began to accelerate again — even if the gains have been somewhat uneven from month to month.
2) Here’s a chart from the establishment survey (click to enlarge), showing that job growth in February was broadly spread across sectors — with the glaring exception of government, where jobs declined by 30,000:
3) In the last two months, the household survey had been painting a prettier picture than the establishment survey, and although the two converge a bit this month, that continues to be the case. The household survey shows that the total number of people employed increased by 250,000, and the labour force participation rate was unchanged. In other words, the decline in the unemployment rate was not due to an increase in the proportion of the population leaving the labour force.
And here is U-6 (the rate that includes people who have stopped looking for work and employees who have settled for part-time work because they either lost or can’t find full-time work), which continues to fall:
4) Here’s one take on the point above and what it means for the markets, from Marc Ostwald of Monument:
The question that has to be asked now is whether the Establishment survey (i.e. Payrolls) is actually understating the improvement in labour demand? A further encouraging feature is some gradual signs that the long-term unemployed are also finding work as evidenced by the fall in the U-6 rate to 15.9%, though this is still far too high in absolute terms.
Conclusion: in contrast to January’s weather disrupted report this, to all intents and purposes, paints a positive picture of the labour market, and if this were to be sustained over the next few months, then the FOMC will be placing ever more emphasis on its exit strategy, rather than any consideration of more support for the economy.
For Treasuries, the broadly as expected tone of the report suggests the focus can now turn to building a concession ahead of next week’s $66.0 Bln of 3, 10 & 30-yr auctions, once today’s POMO has been conducted, with the 10-yr yield likely find support at 3.53, while a break of 3.60/63 congestion would be needed to retest 3.71 and 3.74 8th February high.
5) That said, it’s not entirely great news that the unemployment rate dropped again. Given the staggering number of people that have left the labour force since the recession, you would hope to see more of them trying to rejoin it now that jobs are coming back. But you’re not. Here’s Steven Wieting and Citi:
The unemployment rate surprisingly fell again to 8.9% from 9.0%. This reflected 250,000 job gains in the household survey, but a very small 60,000 rebound in the labor force. The unemployment rate has been poised to fall, but labor force gains are unusually lagging.
6) And another skeptical point from David Buik of BGC Partners:
However, how much of last month’s gain was a reversal of the severe weather impact in January? The big rebound in construction employment, up 33,000 last month after falling by 22,000 in January, suggests that the inclement weather conditions were was a material factor. Over the past three months, payrolls have been increasing at an average monthly of 135,000. This needs to be improved upon to unequivocally state that the economic show is back on the road.
7) Floyd Norris blogs that “the last time the unemployment rate fell 0.9 percentage points in three months was in 1983. That was when the economy finally started to rise rapidly after the double-dip recessions of the early 1980s.”
8) David Resler of Nomura chimes in with a bold call, though qualified with a significant “unless”:
Overall this report strongly confirms the growing evidence that the economic expansion has moved into a self-sustaining growth phase. Unless the surge in oil prices undercuts confidence and spending markedly, look for the trend in employment gains to strengthen further in the months ahead. …
The household survey data also showed that non-agricultural, private sector employment employment rose by 272k and by an average 145k over the last four months virtually the same as the 146k 4-month average of private sector NFP.
9) Some morning market reaction — US equities down a bit, 10-years TSYs up:
10) See more commentary: Felix Salmon is not impressed, neither is Ed Harrison. The Center on Budget and Policy Priorities has great charts, and David Leonhardt is hopeful that the establishment survey isn’t accounting for new businesses. Here are some good points from Calculated Risk:
If we average the last two months together, the 63,000 payroll jobs added in January and the 192,000 payroll jobs in February, that gives 127,500 payroll jobs per month. And that is a barely enough to keep up with the growth in the labor force. …
The average workweek was unchanged at 34.2 hours, and average hourly earnings ticked up 1 cent. Both disappointing.
For some closing perspective and a sense of how much more is needed from the labour market, here is one of the charts from CBPP:
Here’s the full release:
Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing.
Household Survey Data
The number of unemployed persons (13.7 million) and the unemployment rate (8.9 percent) changed little in February. The labor force was about unchanged over the month. The jobless rate was down by 0.9 percentage point since November 2010.
Among the major worker groups, the unemployment rates for adult men (8.7 percent), adult women (8.0 percent), teenagers (23.9 percent), whites (8.0 percent), blacks (15.3 percent), and Hispanics (11.6 percent) showed little or no change in February. The jobless rate for Asians was 6.8 percent, not seasonally adjusted.
The number of job losers and persons who completed temporary jobs, at 8.3 million, continued to trend down in February and has fallen by 1.2 million over the past 12 months. The number of long-term unemployed (those jobless for 27 weeks or more) was 6.0 million and accounted for 43.9 percent of the unemployed.
Both the civilian labor force participation rate, at 64.2 percent, and the employment-population ratio, at 58.4 percent, were unchanged in February. (See table A-1.)
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.3 million in February. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)
In February, 2.7 million persons were marginally attached to the labor force, up from 2.5 million a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)
Among the marginally attached, there were 1.0 million discouraged workers in February, a decrease of 184,000 from a year earlier. (These data are not seasonally adjusted.)
Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.7 million persons marginally attached to the labor force in February had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. (See table A-16.)
Establishment Survey Data
Total nonfarm payroll employment rose by 192,000 in February. Job gains occurred in manufacturing, construction, and several service-providing industries. Since a recent low in February 2010, total payroll employment has grown by 1.3 million, or an average of 106,000 per month. (See table B-1.)
Manufacturing employment rose by 33,000 in February. Almost all of the gain occurred in durable goods industries, including machinery (+9,000) and fabricated metal products (+7,000). Manufacturing has added 195,000 jobs since its most recent trough in December 2009; durable goods manufacturing added 233,000 jobs during this period.
Construction employment grew by 33,000 in February, following a decline of 22,000 in January that may have reflected severe winter weather. Within construction, specialty trade contractors accounted for the bulk of the February job gain (+28,000).
Employment in the service-providing sector continued to expand in February, led by a gain of 47,000 in professional and business services. Employment services added 29,000 jobs, and employment rose by 7,000 in management and technical consulting.
Within employment services, the number of jobs in temporary help services edged up over the month.
Health care employment continued to increase in February (+34,000). Over the prior 12 months, health care had added 260,000 jobs, or an average of 22,000 jobs per month.
Transportation and warehousing employment increased by 22,000 in February, with half of that gain in truck transportation (+11,000).
Employment in both state and local government edged down over the month. Local government has lost 377,000 jobs since its peak in September 2008.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.2 hours in February. The manufacturing workweek for all employees rose by 0.1 hour to 40.5 hours, while factory overtime rose by 0.2 hour to 3.3 hours. The average work-week for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.5 hours. (See tables B-2 and B-7.)
In February, average hourly earnings for all employees on private nonfarm payrolls increased by 1 cent to $22.87. Over the past 12 months, average hourly earnings have increased by 1.7 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $19.33. (See tables B-3 and B-8.)
The change in total nonfarm payroll employment for December was revised from +121,000 to +152,000, and the change for January was revised from +36,000 to +63,000.
Check for updates and analysis above the release as we make our way through the figures.
Payrolls snowed under (January 2011) – FT Alphaville