U.S. Employment Jumps; Jobless Rate Reaches Cycle Low

The rate of job market improvement picked up a bit last month. Payroll employment gained 236,000 (1.5% y/y) after a 119,000 January increase (revised from 157,000) and a 219,000 December rise (revised from 196,000). Consensus had been looking for a 152,000 increase. Job growth across industries was firm. The February unemployment rate fell from 7.9% to 7.7%, the lowest since December 2008.  A 7.8% rate had been expected. The rate on the broadest measure of unemployment, which includes marginally attached & those involuntarily working part-time, slipped to 14.3%.

From the establishment employment survey, the 236,000 increase in payrolls last month was the strongest since November. Jobs in the construction sector jumped 48,000 (2.5% y/y) and factory sector employment gained 14,000 (0.9% y/y). A 179,000 worker rise (1.9% y/y) in private services payrolls powered the overall jobs gain as it recovered from a tepid 99,000 January rise. Professional & business services led the increase with a 73,000 advance (2.7% y/y). Of that, temporary help jobs gained 16,000 (4.4% y/y). Jobs in both education & health services (1.8% y/y) and leisure & hospitality (2.4% y/y) grew 24,000. Retail trade employment rose 23,700 (1.7% y/y). In the public sector, employment fell again. The 10,000 worker shortfall (-0.5% y/y) owed to an 8,000 decline (-0.6% y/y) in state and a 2,000 drop (-0.2% y/y) in local jobs. The number of federal government jobs held steady m/m (-1.3% y/y).

The length of the average workweek rose to 34.5 hours and recovered its January decline. In goods producing industries the length of the workweek jumped to 40.5 hours with the factory workweek at 40.9 hours. Total aggregate hours worked (employment time hours) rose 0.7% and pulled the Q1 average so far up 2.3% (AR) from Q4'12. During the last five years there has been a 71% correlation between the q/q change in aggregate hours and real GDP.

Average hourly earnings rose 0.3% for the fourth straight month. The 2.0% y/y rate of increase is a notable improvement from an earlier low of 1.3%. It has been led by a 2.2% y/y gain in private service-producing earnings. That owes to a 4.9% gain in financial activities and 3.8% growth in information. Education & health services earnings lagged with a 1.6% gain as did factory sector earnings, up 1.1% y/y. 

Contained in household jobs survey was a drop in the unemployment rate to 7.7%, its lowest for the economic expansion. However, the decline was accompanied by another drop in the civilian participation rate to 63.5%, its lowest since early-1979. Employment rose 170,000 during February (1.0% y/y) but the labor force fell 130,000 (+0.5% y/y). The jobless rate for teenagers jumped to 25.1%. For those aged 20-24 years, it declined to 13.1% and for individuals over 25, it was a new cycle low of 6.3%. The highest unemployment rate was logged by black, male teenagers at 48.7%.

The further detail of the household survey continued to show the merits of higher education. Employment of college graduates grew 3.7% y/y while for those with some college or an associates degree it increased 0.7% y/y. For high school graduates but no college employment fell 1.4% y/y; for those with less than a high school diploma it dipped 0.2% y/y. The figures covering the length of time out of work showed that 25.6% of those unemployed had been so for a lessened 52 weeks or more. The average duration of unemployment ticked up m/m to 36.9 hours.

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.