Employment Report for February (Unemployment Down to 4.5%; +97,000 Feb. Jobs; +152,000 with Catch-ups)

NOTE: This post has been moved to the top for the rest of the day because of its relative importance.

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Pre-report Info

• ADP’s National Employment report, with newly revised methodology, came in at 57,000.
• Rick MacDonald of Action Economics, writing at MSNBC, says that the ADP number, which excludes government job additions and has what he claims is a downward bias, translates to an 87,000 prediction for the government’s report. McDonald reports a wide range in expectations: 25,000 at the low end, 165,000 at the high end, and 90,000 as the consensus.
• This report from Reuters tell us that the betting (literally) by derivatives traders is for +82,500, while polled economists came in at +100,000. This article and another standalone piece note that “the Monster Worldwide ….. Employment Index rose to 177 in February from 168 in January — a jump of 5.4 percent. It was 157 a year earlier.” It’s also at an alltime record high, which Monster believes bodes well for March hiring.

The BLS Report (Link here)

From the Household Survey:
- Unemployment rate — 4.5% (down from 4.6%)
- Increase in number of people working — DECREASE of 38,000

From the Establishment Survey:
- Net new jobs added in February — +97,000.
- Catch-up adjustments: December 2006 — revised to +226,000, which is 20,000 higher than the 206,000 in January’s report; January 2007 — revised to +146,000, which is 35,000 higher than the 111,000 in originally reported in January.
- Net additional people working at the end of February compared to what was reported in January — 152,000 (97+20+35).

Comment

It’s hard to complain when the unemployment rate goes down. The jobs increase, especially after including the catch-up adjustments, is acceptable after so many good months and a relatively cool February weatherwise. It’s becoming obvious that reporting only the initial number without the catch-up adjustments gives an incomplete picture of the employment situation, so it will be interesting to see how or if the press reports the revisions that were made to December and January.

Media Coverage

See for yourself: Here’s AP, and here’s Reuters.

I think AP’s opening paragraph is an all-too-typical example of making sure something negative gets into a story that should be, at least objectively, positive:

The nation’s unemployment rate dipped to 4.5 percent in February even as big losses of construction and factory jobs restrained overall payroll growth. Wages grew briskly.

The prior-month revisions got into the fifth paragraph. And of course, AP has the obligatory reminder of President Bush’s low polling numbers on the economy and the Democratic Party line about income inequality.

Reuters did quite a bit better with its first two paras (Update, Mar. 11 — though the “smallest gain in two years is a premature assertion in light of recent experience with revisions — see this post that will go up on March 12 for more):

WASHINGTON — The U.S. economy added a slightly weaker-than-expected 97,000 jobs in February, the smallest gain in more than two years, as increases in service-sector employment offset declines in construction and manufacturing, a government report showed on Friday.

However, substantial revisions to employment in January and December boosted payrolls by 55,000 more jobs than previously reported, the Labor Department said.

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UPDATE: House Minority Leader John Boehner’s e-mail today (web page here), reacting to the BLS report, overlooked the catch-ups, but did refer to over 7.5 million jobs added since August 2003. That is indeed the case (go here and select the Seasonally Adjusted version of the very first table to replicate):

Not bad for 3-1/2 years — an annual average of about 2.14 million.

The point should not be missed that the job growth began as the effect of the tax cuts passed earlier in 2003 — the ones that reduced capital gains tax rates, reduced taxation of dividends, and reduced the top income-tax rates — started kicking in. Voodoo, schmoodoo.

UPDATE 2: I regret to report that during that 3-1/2 year period, only 153,000 of those jobs were added in Ohio, and only 56,000 in Michigan. These two states combined, which have about 7% of the nation’s population, added only about 2.8% of the jobs. Yikes. (Feb. 2007 is not available yet for either state, but won’t materially change the results.)

UPDATE 3: Businomics reminds us that the BLS report shows that “Wage rates continued to grow at a moderate-to-high rate.”

UPDATE 4, Mar. 10: Dan Clifton at the American Shareholders Association blog made some very good points yesterday, and you should see the chart that is in the post (bolds are mine):

Today’s report was the 24th consecutive month of upward revisions (to prior months — Ed.).

This morning’s Marketwatch headline proclaimed today’s report of 97,000 jobs is the lowest level since January 2005 when the month recorded a level of 95,000 new jobs. However, this is very misleading. Since January there have been four initial monthly reports under 100,000 jobs for the month. January 2005 was initially reported at 75,000 but was revised higher to 95,000. September and October 2005 were initially reported as 48,000 and 37,000 respectively. Yet, their final revisions 105,000 and 107,000. More recently, October 2006 was initially reported as 86,000 new jobs but the revised number came in at 109,000.

These (February) numbers will be revised higher and bring the level over 100,000. Yet, the naysayers will still be saying job growth is slowing. But this (is) wrong. If you look at the charts above we can see how off BLS has been with the initial reports.

I hope to begin tracking those revisions shortly.