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Economy in Brief

U.S. Non-farm Payroll Growth Slowed
by Tom Moeller March 5, 2004

Growth in non-farm payrolls slowed last month to 21,000 (0.0%) from the downwardly revised 97,000 January gain. Consensus expectations had been for a rise of 125,000.

A weak 46,000 (0.4% y/y) gain in service producing payrolls was the source of last month's disappointment. Monthly gains of just 0.1% were spread across industries except in the leisure and "other" categories where payrolls fell. A sign of strength came from the temporary help services industry where jobs jumped 32,000 (9.1% y/y).

Construction jobs also disappointed and fell 24,000 (+1.8% y/y).

Manufacturing sector payrolls fell 3,000 (-3.1% y/y), the smallest monthly decline since 2000. Perhaps signaling better prospects for factory sector jobs, the one-month diffusion index for manufacturing payrolls rose to 51.8%, the highest level since 2000.

The index of aggregate hours worked (employment times hours worked) fell 0.1% following the downwardly revised 0.6% January gain. Aggregate hours so far in 1Q are up 1.0% (AR) from the 4Q average.

The one-month diffusion index for private non-farm payrolls fell to 50.9% from the upwardly revised 51.1% in January.

Average hourly earnings rose 0.2% (1.6% y/y). Earnings in the factory sector rose 0.2% (2.3% y/y) following a 0.1% January gain, revised from -0.6%.

From the separate household survey, the unemployment rate held steady at 5.6%, as expected.

Household employment fell 265,000 (+0.7% y/y) and the labor force fell 392,000 (+0.4% y/y). The labor force participation rate dropped further to 65.9% versus 67.1% averaged from 1997-2000.

"Your Current Job Probably Won't Be Your Last" from the Federal Reserve Bank of St. Louis is available here.

Employment Feb Jan Y/Y 2003 2002 2001
Payroll Employment 21,000 97,000 0.1% -0.3% -1.1% 0.0%
  Manufacturing -3,000 -13,000 -3.1% -4.8% -7.2% -4.8%
Average Weekly Hours 33.8 33.8 33.7 33.7 33.8 34.0
Average Hourly Earnings 0.2% 0.3% 1.6% 2.7% 2.9% 3.8%
Unemployment Rate 5.6% 5.6% 5.9% 6.0% 5.8% 4.8%
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