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Economy in Brief

U.S. Payrolls Firm
by Tom Moeller March 4, 2005

Non-farm payrolls rose 262,000 in February, doubling the prior month's increase which was downwardly revised. Consensus expectations had been for a 225,000 rise.

From the separate household survey the unemployment rate rose to 5.4%. Employment fell 97,000 (+1.3% y/y) while the labor force expanded 153,000 (1.1% y/y). The labor force participation rate remained stable m/m at 65.8% versus a high in 2000 of 67.3%.

Factory sector payrolls recovered all of the lessened 20,000 January decline. The breadth of hiring gain narrowed, however, as indicated by a decline in the one month diffusion index to 43.5%. That index rose above 60% early in 2004.

Construction jobs rose 30,000 (4.0% y/y) versus a revised no change in January.

Private service producing payrolls rose 174,000 (2.1% y/y) led by a strong 81,000 (3.9% y/y) gain in professional & business services. Education & health services jobs rose 18,000 (2.4% y/y) and financial jobs rose 12,000 (2.1% y/y). Government employment increased 33,000 (0.9% y/y) though federal government jobs rose just 2,000 (-0.4% y/y).

The index of aggregate hours worked (employment times hours worked) rose 0.2% (+2.2% y/y) after an upwardly revised 0.2% January gain. In 1Q the index is 0.6% (AR) ahead of 4Q04.

Average hourly earnings rose were unchanged reflecting a 0.1% (+2.6% y/y) in private service producing earnings. Manufacturing earnings rose 0.2% (2.6% y/y).

Yesterday's speech by Fed Chairman Alan Greenspan on the tax system can be found here.

Employment Feb Jan Y/Y 2004 2003 2002
Payroll Employment 262,000 132,000 1.8% 1.1% -0.3% -1.1%
  Manufacturing 20,000 -20,000 0.4% -1.2% -4.9% -7.2%
Average Weekly Hours 33.7 33.7 33.8 33.7 33.7 33.8
Average Hourly Earnings 0.0% 0.3% 2.5% 2.1% 2.7% 2.9%
Unemployment Rate 5.4% 5.2% 5.6% 5.5% 6.0% 5.8%
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