Comments on February Employment Report

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

Leisure and hospitality gained 105 thousand jobs in February. At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 410 thousand jobs since February 2020. So, leisure and hospitality has now added back about 95% all of the jobs lost in March and April 2020.

Construction employment increased 24 thousand and is now 310 thousand above the pre-pandemic level.

Manufacturing lost 4 thousand jobs and is now 198 thousand above the pre-pandemic level.

Earlier: February Employment Report: 311 thousand Jobs, 3.6% Unemployment Rate

In February, the year-over-year employment change was 4.34 million jobs.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

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

Both are at the pre-pandemic levels and suggest essentially all of the prime age workers have returned to the labor force.

Average Hourly Wages

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

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.6% YoY in February.

Wages growth was strong last year in the March through July period, so year-over-year wage growth will likely slow over the next few months.

Part Time for Economic Reasons

From the BLS report:
“The number of persons employed part time for economic reasons, at 4.1 million, was essentially unchanged in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.”The number of persons working part time for economic reasons increased in February to 4.067 million from 4.050 million in January. This is at pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 6.8% from 6.6% in the previous month. This is down from the record high in April 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is below the level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

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

According to the BLS, there are 1.057 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.111 million the previous month.

This is at pre-pandemic levels.

Summary:

The headline monthly jobs number was above expectations; however, employment for the previous two months was revised down by 34,000, combined. The headline unemployment rate increased to 3.6%.

Overall, this was a solid employment report.