February Payrolls Surge 236K, Jobless Rate Falls to 7.7%

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The Labor Department reported that U.S. employers increased their payrolls by 236,000 in February, well above the consensus estimate for an increase of just 160,000, and the unemployment rate fell from 7.9 percent to 7.7 percent, the lowest level since December 2008.

This is, however, another case where the details are important and the details are mostly negative.


The rise in payrolls follows overall downward revisions to prior months’ data as payroll growth in December was revised up from 196,000 to 219,000, but the January total moved in the other direction, down sharply from 157,000 to 119,000 for a total downward revision of 15,000.

Seasonal factors are no doubt involved here, but the big downward revision in January could be important as it comes following a long period of mostly upward revisions to the data.

As for the lower jobless rate, like many other times in recent years, the decline was due largely to people leaving the labor force and no longer being counted as “unemployed”. While the number of employed people rose by 170,000, the number of people not in the labor force surged by 296,000 and most of these people still want a job, but they’ve given up looking.

The broader U-6 measure of under-employment (including persons marginally attached to the labor force and those settling for part-time work instead of full-time work) fell from 14.4 percent to 14.3 percent.

Returning to the payrolls survey, professional and business services saw broad-based gains while adding 73,000 positions and an improving housing market again contributed to job growth as the construction sector added 48,000 jobs in February after a gain of 25,000 in January, mostly in specialty trade.

jobs by category

Retail trade accounted for 23,700 of the 30,000 new positions in trade, transportation, and utilities while food services and drinking establishments were responsible for more than three-quarters of the 24,000 payrolls increase for leisure and hospitality businesses.

The health care industry added its usual number of new jobs while state governments were responsible for nearly all of the 10,000 decline in government payrolls.

Overall, this is certainly a good jobs report, but it’s much less than meets the eye and it’s certainly no reason to think that the Federal Reserve will end its money printing effort anytime soon.

Source: Iacono Research

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About Tim Iacono