HEADLINES:
- +236,000 jobs added
- U3 unemployment rate down -0.1% from 4.8% to 4.7%
- U6 underemployment rate down -0.2% from 9.4% to 9.2%
Here are the headlines on wages and the chronic heightened underemployment:
Wages and participation rates
- Not in Labor Force, but Want a Job Now: down -142,000 from 5.739 million to 5.597 million
- Part time for economic reasons: down -136,000 from 5.840 million to 5.704 million
- Employment/population ratio ages 25-54: up +0.1% from 78.2% to 78.3%
- Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.82 to $21.86, up +2.5% YoY. (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)
December was revised downward by -2,000, and January was revised upward by +11,000, for a net change of +9,000.
The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly positive.
- the average manufacturing workweek was unchanged at 40.8 hours. This is one of the 10 components of the LEI.
- construction jobs increased by +58,000. YoY construction jobs are up +219,000.
- manufacturing jobs increased by +28,000, and after being down YoY for a year, have now turned the corner again and are up +7,000 YoY
- temporary jobs increased by +3,100.
- the number of people unemployed for 5 weeks or less increased by +98,000 from 2,468,000 to 2,566,000. The post-recession low was set over 1 year ago at 2,095,000.
Other important coincident indicators help us paint a more complete picture of the present:
- Overtime rose +0.1 from 3.2 to 3.3 hours.
- Professional and business employment (generally higher- paying jobs) increased by +37,000 and are up +597,000 YoY, an acceleration over the last year’s pace.
- the index of aggregate hours worked in the economy rose by 0.2 from 106.4 to 106.6
- the index of aggregate payrolls -rose by 0.6 from 132.4 to 133.0.
Other news included:
- the alternate jobs number contained in the more volatile household survey increased by +447,000 jobs. This represents an increase of 1,485,000 jobs YoY vs. 2,,349,000 in the establishment survey.
- Government jobs rose by +8,000.
- the overall employment to population ratio for all ages 16 and up rose from 59.9% to 60.0 m/m and is up +0.2% YoY.
- The labor force participation rate rose from 62.9% to 63.0% and is up +0.1% YoY (remember, this includes droves of retiring Bsoomers).
SUMMARY
This was a very good report in almost all respects, including the end of the manufacturing jobs recession, and a slight acceleration in better-paying professional and business jobs.
The few warts included the fact that none of the broader measures of labor market slack made new lows (although they did decline), and short term unemployment – a leading indicator – has not made a new low in 15 months.
But most of all, aside from some continued slack, the big shortfall in the economy as experienced by most Americans is the seemingly unending paltry wage growth. Once again, adjusted for inflation, there has likely been no growth whatsoever in real wages YoY. Nearly 8 years into an expansion, this ought to be totally unacceptable, and should be ringing alarm bells about what might happen to wages when the next recession inevitably hits.
Maybe it is there; but, where is PR? It isn’t 78% for sure.
I’ll reserve judgement. Obama fluctuated between seemingly good reports that later got revised downward, seemingly bad reports that got revised upward, some where they claimed an increase in jobs when new part-time jobs outweighed lost full-time jobs (division of labor, not job creation), and sometimes a loss of jobs turned into a gain by “seasonal adjustments.”
Each monthly report is just an initial guesstimate which will be changed later.
Because of the secular decline of the average workweek I prefer to look at the index of hours worked rather than the number of people employed.
It rose 0.2% in both January and February. A 0.2% monthly increase has been the norm for this cycle and the most frequent observation. On this basis the January and February just showed the same trend that has been in place since the bottom of the recession.
If you compare the number of employed to the 12 month moving average both January and February were above the 12 month moving
but not by a significant amount.average. There have been numerous months when the monthly change was this far above the moving average.
Your point about wages is right. There is still no evidence that average hourly earnings for non-supervisory workers has risen from the 2.5% annual average growth rate in place since 2013. But wages for all workers are showing signs of accelerating. Together the two sets of wages imply that firms are starting to pay higher wages to get professional, managerial and other higher sage workers. On balance they suggest that real personal income excluding transfers — the single best measure to use in evaluating consumer spending — is still slowing rather than accelerating. It peaked in 4 at over 4.5% growth and was at 2.02% in January.
Overall, I do not believe that the February jobs report showed improvement on the sluggish trend that has been in place for several years. I take exception to the analysis that the February jobs report was strong. Claiming it was strong is just an example of lowered expectations.
Real DPI excluding transfers peaked in 2014.
Boy, I should have proofed my comments.
The fact that wage growth follows increased demand for labor makes sense. I used to get 300+ applications for $10/hr unskilled positions 5 yrs ago. Now I get maybe 30. And the good people I have are getting promised $13-$15 elsewhere, causing me to raise their wage.
So, from the trenches, you will soon see the wage growth.