Following two months of dismal growth, the February jobs report suggests an improving labor landscape. But despite the numbers, the employment picture remains cloudy at best.
The Labor Department reported today (Friday) that employers added 175,000 jobs last month, beating expectations of 150,000. Yet the February figure is still well below the 280,000 jobs created in the same month a year ago.
Meanwhile, the unemployment rate ticked up to 6.7% from the five-year low of 6.6% hit in January, as more people entered the workforce and failed to find work. Economists were expecting the rate to remain stable at 6.6%.
Economists were anticipating slow job creation due to the harsh winter weather that blanketed much of the country in February. Ice and snow are frequently responsible for flight cancellations and business closings, and bitter cold can also keep consumers inside, pressuring retail hiring.
Indeed, a total of 6.9 million full-time workers reported having hours temporarily reduced due to February's brutal weather.
Friday's jobs report may be better than the last two - but it's still far from good.
"It's just a steady-as-she-goes recovery." Justin Wolfers, senior fellow at the nonprofit think tank the Brookings Institution, wrote on Twitter. "Not fast enough, but not easy to derail."
Following are highlights from the Labor Department's report.
Key Takeaways from the February Jobs Report
- The private sector added 162,000 net new jobs last month. More than half those gains were in industries that pay the least, a notable trend for several months now and one that doesn't bode well for wage growth.
- The government added 13,000 jobs, construction companies added 15,000, and the manufacturing sector added 6,000 jobs.
- Education and health added 33,000 workers, and leisure and hospitality tacked on 25,000.
- Retail lost 4,000 jobs.
- The high-paying information sector lost a hefty 16,000 jobs, which follows a loss of 8,000 jobs in January. The financial sector added a weak 9,000 jobs.
- The U-6 rate, a broader measure of the job market that includes part-time employees who prefer full-time jobs as well as those who have simply stopped looking for work, dipped down from 12.7% to 12.6%.
- The labor participation rate, which measures the percentage of people in the workforce, remained constant at the 35-year-low figure of 63%.
- The number of long-term unemployed increased by 203,000 to 3.8 million, accounting for 37% of the total unemployed.
- Making it even harder to find a job, the labor force swelled by 264,000. That total includes people who have resumed their job hunt.
- Temporary worker headcount grew by 24,000.
- The average work week slipped to 34.2 hours from 34.3 hours.
- Average hourly earnings eked up a $0.09 to $24.31.
- Employment gains for December and January were revised upwards by a modest cumulative 25,000. December's figure was revised to 84,000 from 75,000, and January's number to 129,000 from 113,000.
Jobs and the Fed
Should job growth continue to pick up the pace in coming months, there'll be no reason for the U.S. Federal Reserve to pause on trimming its assets purchases. However, the direction of interest rates is less straightforward.
The Fed started weaning the economy off its stimulus measures in December by reducing monthly bond purchases by $10 billion each time it meets. An improved labor market was a main reason cited for the taper.
Amid a spate of soft economic data, Fed Chair Janet Yellen said late last month in a testimony before the Senate Banking Committee that the central bank would reconsider the strategy if warranted.
And while Yellen also reiterated the 6.5% jobless rate threshold at which the central bank would consider raising interest rates, Fed officials have de-emphasized the jobless rate.
Minutes from the Fed's last meeting show the Federal Open Market Committee challenged "the reliability of the unemployment rate as an indicator of overall labor-market conditions."
Most economists don't expect a rate hike until at least mid-2105.
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