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Economy in Brief

U.S. Payroll Employment and Earnings Improve; Jobless Rate Ticks Higher
by Tom Moeller  March 7, 2014

Nonfarm payrolls grew 175,000 during February following a 129,000 January increase, initially reported as 113,000. The rise outpaced expectations for a 145,000 increase in the Action Economics Forecast Survey. The unemployment rate notched up to 6.7% versus expectations for 6.6%. The total jobless rate, including workers who were marginally attached and part-time for economic reasons, declined to 12.6%, the lowest level since November 2008. Average hourly earnings grew 0.4% (2.5% y/y), double expectations and the strongest monthly rise since January 2011.

From the payroll employment survey, the 175,000 increase in jobs was the strongest in three months. Factory sector job growth remained stable at 6,000 (0.5% y/y) but the gain in construction jobs eased to 15,000 (2.6% y/y). In the private service sector, a 140,000 increase (2.0% y/y) in employment also was the firmest since November. The rise was led by a 79,000 increase (3.7% y/y) in professional & business services. Education & health services jobs grew 33,000 (1.6% y/y) while leisure & hospitality employment gained 25,000 (2.9% y/y). Hiring in financial activities jobs improved 9,000 (0.8% y/y) while trade, transportation & utilities employment rose 7,000 (1.9% y/y). To the downside, jobs in information businesses were off 16,000 (-1.6% y/y) and retail trade jobs fell 4,100 (+1.9% y/y). Transportation & warehousing employment was off 3,600 (+2.0% y/y). In the government sector, a 13,000 worker gain (-0.1% y/y) owed to an 11,000 rise (0.5% y/y) in state payrolls and an 8,000 improvement (0.2% y/y) in local hiring. Federal government payrolls fell 6,000 (-3.3% y/y).

During February, a lessened 59.3% of private industries added workers versus January while on average 62.9% added workers since November. The three-month average was 68.6% in December. In the factory sector, a greatly lessened 51.2% of private industries added workers last month. The three-month figure plunged to 54.9%. It was 74.1% in December.

The length of the average workweek declined to 34.2 hours, its shortest since January 2011, from 34.3. Most notable was the drop in construction to 38.0 hours from 39.2 twelve months ago. Private services hours also fell sharply to 33.0 hours versus 33.3 a year ago. The factory workweek was slightly diminished at 40.7 hours versus 40.9 a year earlier. The index of aggregate hours worked (employment times hours) slipped in February and so far in Q1 is down 0.8% (AR) from Q4'13.

Average hourly earnings improved 0.4% (2.5% y/y), the most since June 2013. The gain was led by a 0.7% jump (2.2% y/y) in construction sector earnings then a 0.4% rise (2.1% y/y) in private services pay. Factory sector earnings gained 0.3% (2.4% y/y).

The household employment survey indicated the unemployment rate increased to 6.7%. The rise was the result of a 42,000 (1.3% y/y) increase in employment, outpaced by a 264,000 rise (0.1% y/y) in the labor force. The labor force participation rate, those in the labor force as a percent of the population, improved m/m to 63.0%, but that remained down from 67.1% averaged from 1997 to 2000. The number of individuals not in the labor force rose 2.3% y/y. Growth has been at a similar rate or higher since 2009. The number of workers out of work for 27 weeks or longer fell 18.9% y/y and the number out for 52 weeks or more declined 13.7% y/y. Of those unemployed, 25.4% were out 52 weeks or more.

By educational attainment, those without a high school diploma realized a 9.8% jobless rate while for high school graduates and no college it was 6.4%. Those with some college but no degree had a 6.2% unemployment rate while for college graduates it was 3.4%. By age, individuals over age 25 had a 5.5% jobless rate while those under 25 saw 14.4% unemployment. Teens were 21.4% out of work.

The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases. The expectation figures are from Action Economics and are in the AS1REPNA database.

Employment: (M/M Chg., 000s) Feb Jan Dec Y/Y 2013 2012 2011
Payroll Employment 175 129 84 1.6% 1.7% 1.7% 1.2%
 Previous -- 113 75 -- -- -- --
 Manufacturing 6 6 7 0.5 0.7 1.7 1.7
 Construction 15 50 -20 2.6 3.3 2.1 0.2
 Private Service Producing 140 84 99 2.0 2.2 2.2 1.9
 Government 13 -16 -2 -0.1 -0.3 -0.8 -1.8
Average Weekly Hours - Private Sector 34.2 34.3 34.3 34.5
(Feb'13)
34.5 34.4 34.3
Average Private Sector Hourly Earnings (%) 0.4 0.2 0.1 2.2 2.1 1.9 2.0
Unemployment Rate (%) 6.7 6.6 6.7 7.7
(Feb'13)
7.4 8.1 8.9
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