February jobs report: a Big Win!

February jobs report: a Big Win!

There were two main trends I was looking for in this jobs report: 

1. Is the pace of job growth beginning to decelerate? 

2. Is wage growth holding up? Is it accelerating?

The answers were:

1. The 6-month average of monthly gains, which was running at 548,000 in the 2nd half of 2021, increased in February to 582,000.

2. Wage growth, which averaged 5.9% in the 2nd half of 2021, is now up 6.7% YoY. Aside from April 2020, this is the highest wage growth in *40 years.* 

We still have 2.105 million jobs to go, or 1.4%, to equal the number of employees in February 2020 just before the pandemic hit. At the current average rate for the past 6 months, that’s about 4 more months.
Here’s my in-depth synopsis of the report:

HEADLINES:

  • 678,000 jobs added. Private sector jobs increased 654,000. Government jobs increased by 24,000 jobs. The alternate, and more volatile measure in the household report indicated a gain of 548,000 jobs, which factors into the unemployment and underemployment rates below.
  • U3 unemployment rate declined -0.2% to 3.8%, compared with the January 2020 low of 3.5%.
  • U6 underemployment rate rose 0.1% to 7.2%, compared with the January 2020 low of 6.9%.
  • Those not in the labor force at all, but who want a job now, declined -349,000 to 5.355 million, compared with 4.996 million in February 2020.
  • Those on temporary layoff decreased -71,000 to 888,000.
  • Permanent job losers declined -47,000 to 1,583,000.
  • December was revised upward by 78,000, and January was also revised upward by 14,000, for a net gain of 92,000 jobs compared with previous reports.

Leading employment indicators of a slowdown or recession

These are leading sectors for the economy overall and will help us gauge how strong the rebound from the pandemic will be.  These were *very* positive:

  • the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, rose +0.3 hours to 41.7 hours. This is a big jump, and is very positive.
  • Manufacturing jobs increased 36,000. Since the beginning of the pandemic, manufacturing has still lost -179,000 jobs, or -1.4% of the total.
  • Construction jobs increased, 60000. Since the beginning of the pandemic, -11,000 construction jobs have been lost, or -0.1% of the total.
  • Residential construction jobs, which are even more leading, rose by 6,700. Since the beginning of the pandemic, 52,000 jobs have been *gained* in this sector, or +6.2%.
  • temporary jobs rose by 36,000. Since the beginning of the pandemic, 240,400 jobs have been gained.
  • the number of people unemployed for 5 weeks or less decreased by -286,000 to 2,131,000, which is only 8,000 higher than just before the pandemic hit.
  • Professional and business employment increased by 95,000, which is 596,000 *above* its pre-pandemic peak.

Wages of non-managerial workers

  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $0.8 to $26.94, which is a 6.7% YoY gain. 

Aggregate hours and wages:

  • The index of aggregate hours worked for non-managerial workers rose by 0.7%, which is a  loss of -0.8% since just before the pandemic.
  •  The index of aggregate payrolls for non-managerial workers rose by 1.0%, which is a gain of 11.2% (before inflation) since just before the pandemic.

Other significant data:

  • Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose 179,000, but are still -1,532,000, or -9.0% below their pre-pandemic peak.
  • Within the leisure and hospitality sector, food and drink establishments increased 124,000 jobs, and is still -824,000, or -6.7% below their pre-pandemic peak.
  • Full time jobs increased +642,000 in the household report.
  • Part time jobs decreased -16,000 in the household report.
  • The number of job holders who were part time for economic reasons increased by 418,000 to 4,135,000, which is a decrease of -255,000 since before the pandemic began.

Summary

This was simply an excellent jobs report. The only (slight) blemishes I can find are the slight increase in the underemployment rate, and the increase in those part time for economic reasons, a big component of that underemployment rate. 

Everything else was positive, including *all* of the leading indicators in the report, plus the revisions to the last two months. Manufacturing turned more positive, with the recent decline in the manufacturing workweek almost totally reversed. Construction jobs are almost completely back to their pre-pandemic levels. Even labor and hospitality jobs, including food and drink jobs, made sizable gains – although at their current pace, it will take over half a year for those to return to pre-pandemic levels.

Because real sales and income have not improved in over half a year, I expect the pace of job gains to slow considerably in the coming months. But not this month: this was simply a big win!