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February Jobs Report Is Good, But Hardly Great

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The first Jobs Report to cover a full month in the which the Trump Administration was in power continued to show steady, if not entirely impressive, jobs growth that nonetheless would appear to guarantee that we’ll see another interest rate increase from the Federal Reserve Board:

Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in construction, private educational services, manufacturing, health care, and mining.

The number of unemployed persons, at 7.5 million, changed little in February. The unemployment rate, at 4.7 percent, was little changed over the month but was down from 4.9 percent a year earlier. (See table A-1.)

Among the major worker groups, the unemployment rate decreased for Whites to 4.1 percent in February, while the jobless rates for adult men (4.3 percent),  adult women (4.3 percent), teenagers (15.0 percent), Blacks (8.1 percent), Asians (3.4 percent), and Hispanics (5.6 percent) showed little or no change. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.8 million in February and accounted for 23.8 percent of the unemployed. Over the year, the number of long-term unemployed was down by 358,000. (See table A-12.)

In February, the labor force participation rate, at 63.0 percent, and the employment-population ratio, at 60.0 percent, showed little change. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.7 million in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find full-time jobs. (See table A-8.)

(…)

Total nonfarm payroll employment increased by 235,000 in February. Job gains occurred in construction, private educational services, manufacturing, health care, and mining. (See table B-1.)

In February, construction employment increased by 58,000, with gains in specialty trade contractors (+36,000) and in heavy and civil engineering construction (+15,000). Construction has added 177,000 jobs over the past 6 months.

Employment in private educational services rose by 29,000 in February, following little change in the prior month (-5,000). Over the year, employment in the industry has grown by 105,000.

Manufacturing added 28,000 jobs in February. Employment rose in food manufacturing (+9,000) and machinery (+7,000) but fell in transportation equipment (-6,000). Over the past 3 months, manufacturing has added 57,000 jobs.

Health care employment rose by 27,000 in February, with a job gain in ambulatory health care services (+18,000). Over the year, health care has added an average of 30,000 jobs per month.

Employment in mining increased by 8,000 in February, with most of the gain occurring in support activities for mining (+6,000). Mining employment has risen by 20,000 since reaching a recent low in October 2016.

Employment in professional and business services continued to trend up in February (+37,000). The industry has added 597,000 jobs over the year.

Retail trade employment edged down in February (-26,000), following a gain of 40,000 in the prior month. Over the month, job losses occurred in general merchandise stores (-19,000); sporting goods, hobby, book, and music stores (-9,000); and electronics and appliance stores (-8,000).

Employment in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government, showed little or no change over the month.

Additionally, the Bureau of Labor Statistics reported that the jobs number for December was revised downward from +157,000 to +155,000 and January was revised upward from +227,000 to +238,000, making for a net adjustment for those to months +9,000. This means that for the past three months, jobs growth has averaged a somewhat respectable 209,333 (rounded) per month, which represents an increase from the three-month average we saw last month thanks mostly to the strong numbers for January and February. For 2016 as a whole, though, the total jobs created number dropped from +2,116,000 to +2,114,000 new jobs for the twelve month period from January to December 2016. This represents a monthly average for the final year of President Obama’s Presidency of 176,166 (rounded) For the still relatively new year of 2017, we stand at 473,000 new jobs to date, for an average of 236,500 new jobs for the first two months of the year. Looking deeper into the report, the long-term unemployment rate and employment participation rates were essentially unchanged once again in February suggesting that there remains a significant portion of the population that has essentially given up on finding work. Beyond the jobs numbers, the average workweek was unchanged for the economy as a whole as well as specific sectors such as manufacturing and production. However, the BLS did report that average hourly earnings did tick up slightly in February following a similar increase in January, meaning there was at least some extra money in workers’ pockets last month although admittedly likely not enough to have an impact on economic growth.

The New York Times summarizes the reports and ponders what it means for Federal Reserve policy going forward:

Employers added 235,000 workers to their payrolls in February, the government reported on Friday, a hefty gain that clears the path for the Federal Reserve to raise its benchmark interest rate when it meets next week.

The official jobless rate fell to 4.7 percent while average hourly earnings grew by 0.2 percent in a report that overlaps with President Trump’s first full month in office.

“They’re ready to go,” said Diane Swonk, founder and chief executive of DS Economics, referring to the central bank’s expected vote next week to raise rates from their historically low levels. “They’re clear as cellophane on this.”

Economists had been anticipating a gain of about 200,000 jobs for the month. Over the past three months, including revisions announced Friday, monthly job growth has averaged 209,000.

Although pockets of the labor market remain weak, the official jobless rate is near what the central bank considers full employment — a threshold where, in theory at least, everyone who wants a job at the going rate can find one.

At the same time, jobless claims are at a 44-year low, the stock market is surging, and consumer spending is growing, bolstering the case for those who argue the economy is strong enough to withstand a rate increase.

Recruiters and employers complain that qualified workers are scarce, pushing them to raise wages, strengthen benefits and offer cushier amenities at the office. “There is a war for talent,” said Lauren Griffin, senior vice president at Adecco Staffing USA. “We’ve got people in orientation classes and they get up and leave because they’re contacted about another job that might be more money.”

Even lower-skill workers in some sectors are finding themselves in more demand. The year-over-year wage gains for store managers and cashiers, for example, were twice the national average, said Andrew Chamberlain, chief economist at Glassdoor, a career website.

Bigger paychecks are something that most Americans, after years of stagnant wage growth, are particularly eager to see. The Federal Reserve, too, has been waiting for an increase, but it is also wary of wages rising too fast. The board’s members want to head off incipient inflation and so have begun to slowly raise rates, which makes borrowing and risk-taking more expensive. At the same time, the Fed wants to avoid putting the brakes on job hiring, especially since the benefits of the eight-year-old recovery have been so unevenly distributed.

Balancing those two goals is tricky.

A broader measure of unemployment — which includes the millions of Americans who have given up looking for work altogether or are working part time but would prefer full-time jobs — is roughly double the official unemployment figure.

Re-engaging men and women who have dropped out of the labor force remains a challenge. The share of the population that is employed is bigger than it was in the recession’s immediate aftermath, but it is still below the more than 63 percent that it had been cruising at in mid-2007.

Contrary to what you might hear today, this number really doesn’t tell us much about the economic impact of the Trump Presidency. For one thing, February was the first full month that Trump was in office, this is hardly sufficient time to judge a handful of economic data and proclaim any kind of trend. Additionally, to a large degree, much of what happened in February is likely a continuation of trends that began in the Obama Administration and are simply continuing forward. This would seem to be especially true since neither Trump nor Congress has really done anything in the past fifty days that could be said to have had an immediate impact on the economy. It’s true, of course, that the stock market has been in a very bullish phase since Trump’s election and that it has hit several record highs in the past several weeks alone. To some extent, you could argue that part of the reason for this uptick in the markets is due to optimism that the new Administration will enact policies favorable to the bottom lines of American business, but there are also other reasons why the stock market has been going up, including the fact that it is the best place for investors to stockpile cash if they want a higher rate of return than you’ll get from simply sticking it in a bank or resorting to the safety of government bonds, which come with the price of historically low-interest rates. Finally, of course, there’s the elusive factor of market psychology, which can turn on a dime. Once that happens, which it inevitably will at some point, the market will head into the correction that is inevitable at some point. In other words, there’s really no measure out there right now upon which to judge the economic impact of the Trump Presidency to date.

As the Times notes, these basically positive number likely mean that we will see another interest-rate increase when the Federal Reserve Board meets later this month. This shouldn’t come as a complete surprise, of course. When the Fed increased rates in December for the first time in a year it essentially telegraphed its intention to engage in similar increases in the coming year on at least a quarterly basis as long as the economic data justified taking that action. Additionally, it was just last week that Fed Chairwoman Janet Yellen dropped another strong hint to Wall Street that a rate hike was the likely outcome of the board’s March meeting later this month. With this relatively positive jobs report and other economic data indicating a solid, albeit nowhere near overheating, economy going forward we can expect that the Fed will once again raise rates by a modest amount later this month. This increase, along with whatever policies the Trump Administration implements, will have a huge impact on the future course of the economy and the jobs market.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. CSK says:

    It’s a fantastic report. The best report ever, believe you me. This report is so wonderful, you will get bored with how wonderful it is.

    Trump’s taking full credit.

    Like or Dislike: Thumb up 7 Thumb down 0

  2. gVOR08 says:

    IIRC this will be a record 76 months of job growth. Thank you, Obama. And thank you, Doug, for realizing this has little or nothing to do with Trump, unlike others.

    It’s good to see that wages are improving. It’s bad to see that the Fed will continue their longstanding policy of not putting up with much of that nonsense.

    Want to start an OTB pool on the start date of the First Trump Recession? I want third quarter, this year.

    Like or Dislike: Thumb up 6 Thumb down 0

  3. CSK says:

    @gVOR08:

    Oh, don’t fret about that article to which you linked. It’s from CNN. Everything from CNN is fake news. Trump said so.

    Like or Dislike: Thumb up 4 Thumb down 0

  4. DrDaveT says:

    February Jobs Report Changes Exactly Nothing Is Good, But Hardly Great

    FTFY

    Like or Dislike: Thumb up 0 Thumb down 0

  5. Guarneri says:

    The notable points in the report are the shift to manufacturing and construction jobs, and away from part time and min wage burger flipping jobs.

    Like or Dislike: Thumb up 2 Thumb down 7

  6. Modulo Myself says:

    Great news for Trump. The economy may have been improving under Obama, blah blah blah, but the average white Republican needs to believe that it’s improving better for white people. With Obama there was no such guarantee.

    Like or Dislike: Thumb up 2 Thumb down 0

  7. wr says:

    @Guarneri: “The notable points in the report are the shift to manufacturing and construction jobs, and away from part time and min wage burger flipping jobs.”

    Plus all those jobs carrying water for Trump. I see Drew’s already got one nailed down.

    Like or Dislike: Thumb up 3 Thumb down 0

  8. al-Alameda says:

    It’s the best jobs report ever!
    I mean Trump brought the unemployment rate down by over 37% points – from 42% to 4.8%

    Trump: “Don’t believe those phony numbers when you hear 4.9 and 5 percent unemployment,” Trump said. “The number’s probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.”

    Like or Dislike: Thumb up 8 Thumb down 0

  9. SenyorDave says:

    The media is truly pathetic:

    The Labor Department on Friday released a strong jobs report showing the US economy added 235,000 jobs in February. During his White House press briefing later in the day, Spicer was asked about Trump’s previous claims that positive job reports under the Obama administration were “phony or totally fiction.”

    “I talked to the president prior to this, and he said to quote them very clearly. They may have been phony in the past, but it’s very real now,” Spicer replied, prompting laughter from reporters in the room.

    The predator in chief spent most of the time during Obama’s presidency pushing a racist narrative about his birthplace and implying that he was an affirmative action president. And suddenly the 35% – 40% unemployment rate nonsense goes away. The old thing about a black person having to be twice as good as a white person seems to be true.

    And the media continues to function as stenographers.

    Like or Dislike: Thumb up 6 Thumb down 0

  10. An Interested Party says:

    @SenyorDave: Surely you aren’t surprised by this latest pile of horseshit coming out of Trump’s/Spicer’s mouths? It is already become more than obvious that Trump would rather lie than breathe…and you needn’t worry about the press singing his praises…just as with his address to Congress, anything remotely half-way decent that he does or that happens on his watch will quickly be washed away due to some idiotic tweet or other stupid move by his administration…this current good news won’t last for very long…

    Like or Dislike: Thumb up 2 Thumb down 0

  11. Sleeping Dog says:

    Doug, you are being consistent, you regularly poo-poo’d similar job numbers under Obama.

    Yes the economy continues to grow slowly, as would be expected in a country with an aging population and a generation of now young adults encumbered by debt. But there was also a report that first time claims for unemployment were up.

    Like or Dislike: Thumb up 1 Thumb down 0

  12. Guarneri says:

    @wr:

    I’m sorry, but not surprised, that you are incapable of dealing with a simple, factual observation. Better we had more minimum wage jobs I guess.

    Trump Derangement Syndrome

    Like or Dislike: Thumb up 0 Thumb down 4

  13. Hal_10000 says:

    Well … at least Trump has gone an entire month without wrecking the economy. Best comment I saw on twitter was that Trump taking credit for these job numbers would be like a man who inherited wealth claiming to be a business ge- …

    Oh, wait.

    Like or Dislike: Thumb up 5 Thumb down 0

  14. al-Ameda says:

    @Guarneri:

    Trump Derangement Syndrome

    Honestly, most people refer to his obvious failings as unbridled narcissism, or a strong personality disorder. I have not heard people refer to Trump’s embarrassing and often times disturbed behavior as “Trump Derangement Syndrome.”

    That said, 5 weeks in, a 90% drop in the UE rate, from 42% to under 5% is amazing!

    Like or Dislike: Thumb up 1 Thumb down 0