U.S. Employment & Wage Growth Weaken in February, but Jobless Rate Rises
|in:Economy in Brief
- Payroll increase slows after January surge.
- Earnings growth moderates unexpectedly.
- Jobless rate increases from 50-year low.
Nonfarm payrolls increased 311,000 in February (2.9% y/y) after rising 504,000 in January and 239,000 in December, revised from 517,000 and 260,000, respectively. Expectations had been for a smaller 223,000 rise in the Action Economics Forecast Survey.
Average hourly earnings gained 0.2% last month following an unrevised 0.3% January gain and three consecutive 0.4% increases. A 0.4% February rise had been expected. The y/y earnings increase edged up to 4.6% and remains above its pre-pandemic rise of 2.9% y/y, as competition for labor increased.
The unemployment rate, measured in the household survey, rose to 3.6% in February from 3.4% in January but remained at its roughly 50-year low. Expectations had been for m/m stability. Household employment rose 177,000 (1.7% y/y), the smallest increase in three months. The labor force rose 419,000, half the January increase; its y/y growth of 1.5% stands below the 2.4% high last March. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, rose to 6.8%, a six-month high.
In the establishment survey, private-sector employment rose 265,000 in February (3.1% y/y) after a 386,000 January increase. Factory sector jobs eased 4,000 (+2.5% y/y) after a 13,000 gain. Construction sector employment increased 24,000 (3.6% y/y) following rising 35,000 in January.
Private service-producing sector employment increased 245,000 in February (3.1% y/y) after improving 335,000 in January. Increases varied greatly amongst service sector categories. Leisure & hospitality employment rose 105,000 (6.6% y/y). Education & health care jobs rose 74,000 (4.3% y/y). Professional & business services employment rose 45,000 (2.5% y/y) including a 6,800 rise (-3.7 y/y) in temporary help employment. Trade, transportation & utilities hiring firmed 38,000 (1.2% y/y) but financial employment fell 1,000 (+1.3% y/y).
Government sector payrolls rose 46,000 last month (2.0% y/y) after increasing 118,000 in January. Local government jobs increased 37,000 (2.4% y/y). State government employment edged 2,000 higher (1.7% y/y) and federal government payrolls rose 7,000 (0.8% y/y) in February.
Private-sector average hourly earnings rose 0.2% in February. Earnings in the goods-producing sector improved 0.1% (4.4% y/y). Earnings in construction rose 0.3% (5.3% y/y), while factory sector earnings declined slightly (+3.7% y/y). In the private services-sector, earnings rose 0.2% but the y/y increase of 4.7% is greatly reduced from 6.1% in March 2022. Trade, transportation & utilities sector pay increased 0.6% (4.7% y/y) last month. The 0.3% rise (6.9% y/y) in leisure & hospitality earnings left the y/y gain below the 14.0% December 2021 peak. Professional & business sector earnings increased 0.2% (4.8% y/y). Information sector pay increased 0.6% (5.5% y/y) and financial activities earnings rose 0.4% (4.7% y/y) last month.
The length of the average workweek slipped to 34.5 hours in February from 34.6 hours in January. The workweek in the goods-producing sector fell to 40.0 hours from 40.2 hours. The construction sector average workweek eased to 39.0 hours while the factory sector workweek slipped to 40.3 hours. The average workweek in the private service sector backpedaled to 33.4 hours and remained below the 34.0 hour high in early-2021. Professional & business service hours were stable at 36.6 hours but leisure & hospitality hours slipped to 25.5 hours from 25.8 in January. The aggregate weekly hours index, a key indicator of production and income, eased 0.1% (+2.5% y/y) during February after rising 0.9% in January. It was the third such decline in the last four months.
The household survey indicated a rise in the jobless rate to 3.6% in February as the size of the labor force rose. The labor force participation rate edged up to 62.5% last month from 62.4%. It remained below the high of 63.3% early in 2020. The rate for teenagers improved to 37.5%. For workers aged 20-24, the rate increased to 72.0% in February, up from 70.3% low six months earlier. For workers aged 25-54, the rate increased to 83.1% and matched the high in January 2020. For individuals 55 and over, the rate fell to 38.4% in February.
The employment/population ratio for all workers in February held at 60.2% and remained above the 59.8% level twelve months earlier. It is still below its reading of 61.1% in February, 2020 just prior to the pandemic.
The average duration of unemployment fell in February to 19.3 weeks and it remained below a 32.0 week high in June of 2021. The median duration of unemployment declined to 8.3 weeks but stood below its 19.9 week high in June 2021. The ranks of those individuals unemployed for 27 weeks or more fell 4.9%, down 37.5% y/y.
The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.
Tom MoellerAuthorMore in Author Profile »
Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.