Comments on the February employment report

To Estimated risk per 03/10/2023 09:21:00

The total number of jobs in the February jobs report beat expectations, however, the number of jobs for the previous two months was revised down by 34,000 combined. The participation rate increased and the unemployment rate increased to 3.6%.

In the field of leisure and hospitality, 105,000 jobs were created in February. At the beginning of the pandemic, in March and April 2020, the leisure and hospitality sector lost 8.2 million jobs, and has lost 410,000 jobs since February 2020. Thus, the leisure and hospitality sector regained about 95% of all lost jobs. in March and April 2020

Employment in construction increased by 24,000 and is now 310,000 higher than pre-pandemic levels.

Manufacturing has lost 4,000 jobs and is now 198,000 more than pre-pandemic levels.

In February, the change in employment compared to last year was 4.34 million jobs.

Prime (25 to 54 years old) Participation

Since overall participation rates are affected by both cyclical (decline) and demographic (population aging, young people staying in school), here is the employment-to-population ratio for the key working age group: 25 to 54 years old.

The participation rate for those aged 25 to 54 increased to 83.1% in February from 82.7% in January, and the ratio of the employed population aged 25 to 54 increased to 80.5% from 80.2% in the previous month .

Both are at pre-pandemic levels and suggest that virtually all workers in their prime have returned to the labor market.

Average hourly wage

The graph shows the nominal change in “Average Hourly Earnings” from last year for all private employees from the Current Employment Statistics (CES).

There was a huge surge at the start of the pandemic as underpaid employees were laid off, and then a year later, the pandemic-related surge reversed.

Wage growth was on a downward trend after peaking at 5.9% y/y in March 2022 and stood at 4.6% y/y in February.

Wage growth was strong last year between March and July, so year-on-year wage growth is likely to slow in the next few months.

Part-time work for economic reasons

From BLS report:

“The number of part-time workers for economic reasons, at 4.1 million, remained virtually unchanged in February. These people, who would have preferred to work full-time, were working part-time because their work hours were reduced or they couldn’t find full-time work.“

The number of people working part-time for economic reasons increased to 4,067 million in February from 4,050 million in January. This is at the pre-crisis level.

These workers are in alternative measure labor underutilization (U-6), which increased to 6.8% from 6.6% in the previous month. This is below the all-time high in April of 22.9% and above the lowest on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This figure is below the level of February 2020 (before the pandemic).

Unemployed for more than 26 weeks

This graph shows the number of unemployed for 27 weeks or more.

According to the BLS, 1,057 million people have been out of work for over 26 weeks and still want to find work, up from 1,111 million the previous month.

This is at the pre-pandemic level.

Summary:

The heading of the monthly number of jobs was higher than expected; however, employment for the previous two months was down by 34,000 combined. The overall unemployment rate increased to 3.6%.

Overall, it was a solid employment report.