March 9, 2018

February 2018 Employment Situation Summary (030918): A BLOCKBUSTER; 313K SA Jobs Added, Unemployment Rate Stays at 4.1 Pct.; NSA Job Additions Break Records, and SA Results Understate Their Strength; Civilian Workforce Jumps by 806K, Participation Rates Jump; Work Week Increases

Filed under: Economy,Taxes & Government — Tom @ 7:19 am

Predictions:

The report will be here at 8:30. Discussions of the not seasonally adjusted numbers and the press’s overwrought obsession with wage increases automatically leading to inflation will come after its release.

HERE IT IS (permanent link to full report with tables): Finally, a jobs number north of 300,000, and upward revisions to prior months, at perhaps the best possible time (to be explained later) —

Total nonfarm payroll employment increased by 313,000 in February, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today.

Employment rose in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.

Household Survey Data

In February, the unemployment rate was 4.1 percent for the fifth consecutive month, and the number of unemployed persons was essentially unchanged at 6.7 million.

Among the major worker groups, the unemployment rate for Blacks declined to 6.9 percent in February, while the jobless rates for adult men (3.7 percent), adult women (3.8 percent), teenagers (14.4 percent), Whites (3.7 percent), Asians (2.9 percent), and Hispanics (4.9 percent) showed little change.

The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.4 million in February and accounted for 20.7 percent of the unemployed. Over the year, the number of long-term unemployed was down by 369,000.

The civilian labor force rose by 806,000 in February. The labor force participation rate increased by 0.3 percentage point over the month to 63.0 percent but changed little over the year.

In February, total employment, as measured by the household survey, rose by 785,000. The employment-population ratio increased by 0.3 percentage point to 60.4 percent in February, following 4 months of little change.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut or because they were unable to find full-time jobs.

Establishment Survey Data

Total nonfarm payroll employment rose by 313,000 in February. Job gains occurred in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.

In February, construction employment increased by 61,000, with gains in specialty trade contractors (+38,000) and construction of buildings (+16,000). Construction has added 185,000 jobs over the past 4 months.

Retail trade employment increased by 50,000 over the month. Within the industry, employment rose in general merchandise stores (+18,000) and in clothing and clothing accessories stores (+15,000). However, over the past 4 months, which traditionally see the bulk of the holiday hiring and layoff, employment in these industries has changed little on net. Elsewhere in retail trade, building material and garden supply stores added jobs over the month (+10,000).

Employment in professional and business services increased by 50,000 in February and has risen by 495,000 over the year. Employment in temporary help services edged up over the month (+27,000).

Manufacturing added 31,000 jobs in February. Within the industry, employment rose in transportation equipment (+8,000), fabricated metal products (+6,000), machinery (+6,000), and primary metals (+4,000). Over the past year, manufacturing has added 224,000 jobs.

Financial activities added 28,000 jobs over the month, with gains in credit intermediation and related activities (+8,000); insurance carriers and related activities (+8,000); and securities, commodity contracts, and investments (+5,000). Over the year, financial activities has added 143,000 jobs.

Employment in mining rose by 9,000 in February, with most of the increase in support activities for mining (+7,000). Since a recent low in October 2016, mining has added 69,000 jobs.

Employment in health care continued to trend up in February (+19,000), with a gain of 9,000 in hospitals. Health care has added 290,000 jobs over the past year.

Employment in other major industries, including wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.5 hours in February. In manufacturing, the workweek increased by 0.2 hour to 41.0 hours, while overtime edged up by 0.1 hour to 3.6 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.2 hour to 33.8 hours.

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.40 in February.

The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 242,000 over the last 3 months.

Strong numbers, pretty much across the board.

Not seasonally adjusted figures

This is arguably the strongest month for employment growth I’ve seen in the 13 years I’ve been covering the employment report.

The raw data for job additions indicates that BLS would have been justified in seasonally adjusted results of almost 600,000 overall, and greater than 500,000 in the private sector:

NSAvsSAanalysis0318

These results are historically the strongest ever for any February:

  • February’s overall job additions of 1.224 million is the highest figure ever for a February (without workforce size adjustments) on record, beating the previous high figure of 1.039 million in February 2013 by 185,000.
  • February’s private-sector job additions of 731,000 is the highest figure ever for a February (without workforce size adjustments) on record, beating the previous high figure of 576,000 seen in February 2017 by 165,000.

This more than makes up for January’s dismal not seasonally adjusted results.

I would argue, and have argued, that comparisons like the one seen above are better indicators of the underlying strength of job gains in any given month than BLS’s seasonally adjusted figures.

The timing of February’s results couldn’t be better because February is the first of five months where the economy has traditionally added a large numbers of jobs (before seasonal adjustments). If this level of momentum carries into the next four months, we could see historic employment gains.

More in a bit.

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UPDATE (reference is to seasonally adjusted figures unless otherwise indicated):

  • The civilian workforce has increased by over 1.3 million in the past two months. During the last seven years of the Obama administration, from 2010 (six months after the recession’s official end) to 2016, the labor force increased by only 6.625 million, an average of less than 1 million per year for seven years. So much for the conventional wisdom that people won’t come back into the workforce in a better economic environment.
  • Not in labor force dropped by over 600K to just over 95 million.
  • After jumping from 6.8 percent to 7.7 percent in January, the volatile black unemployment rate came down to 6.9 percent, the second-lowest figure on record. The unemployment rate for 20-and-over black men came in at 5.9 percent, the lowest figure since December 1973.
  • Full-time employment increased by 729K. That figure is up by over 1 million in the past two months, and by over 3.4 million since the end of 2016.
  • In the past 12 months, mining has added 58K jobs (employment growth of almost 9 percent). Manufacturing has added 224K jobs (+1.8 percent), and construction has added 254K jobs (+3.7 percent). These three sectors, which make up about 14 percent of the workforce, have added 536K jobs, or  23.4 percent of the total of 2.281 million jobs added during that time. Before 2017, almost no one thought that the goods-producing sectors would contribute disproportionately to employment growth.
  • Hourly wage gains weren’t impressive (up only 4 cents in February, and only up 2.6 percent in the past 12 months, but thanks to the longer work week, the news with weekly earnings, which I consider a far more important metric, was better (up 0.44 percent in February, up +2.9 percent in the past 12 months). For some reason, the media, after justifiably noting weak wage increases for years, has recently been fretting that strong wage increases might drive inflation. Obviously, despite the hype, and although the figures are stronger than those seen during the Obama years, that’s not consistently happening yet.

UPDATE 2: Zero Hedge notes that the combined total of full-time and part-time jobs added per the Household Survey is the highest since the turn of the century.

UPDATE 3, March 10: The last time the NOT seasonally adjusted February unemployment rate was equal to the current 4.4 percent was in 2000. The last time it was below 4.4 percent was in 1969.

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OVERALL: One strong month isn’t definitive proof, but February’s results support that notion that the Trump-GOP tax cuts enacted late last year are already making a positive difference.

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10 Comments

  1. Not in Labor Force #

    https://data.bls.gov/timeseries/LNS15000000

    For those wishing to compare, please note that the plateauing of people not working hasn’t happened in decades. If you run the graph back to 1980, the Reagan years you will give a taste of what we can expect in Trump tax cuts by looking at the results of the Reagan tax cuts.

    One can truly be appalled at how much Obama was a feckless incompetent by adding 14,000,000 people to the Not in Labor Force stats from January 2009 to January 2017. During Reagan’s time only 1,000,000 were added over 8 years!!!!!! All while the country’s population was growing.

    While our goal should be getting those 14 million people back to work, IF Trump is allowed to hold the line over the next 8 years, millions upon millions will be added to the work force as people graduate from High School, Community College and Universities. We are potentially looking at 24 million people. But we should not forget or write off those 14 million people Obama screwed over, we need to deport every last illegal alien who stole their jobs and future. Social Security finances will rebound quickly as a result.

    Comment by dscott — March 9, 2018 @ 4:20 pm

  2. I think the NILF number can come down but not by 14 million.

    We have 61 million Social Security recipients (yes, a few are still working, but not many). Add in government retirees (some also still working), stay-at-home parents, and (updated) people still in school, and I would guess you’re easily at 80-85 million. It would be huge progress to get that number down to 90 million from the current 95 million.

    Comment by Tom — March 9, 2018 @ 5:16 pm

  3. #2, Don’t be so sure we can’t get there. It appears we have millions of illegal aliens drawing welfare and SNAP benefits. Trump has the will to deport them IF the GOP actually listened to the voters.

    Cutting welfare to illegal aliens would pay for Trump’s wall

    https://nypost.com/2018/03/10/cutting-welfare-to-illegal-aliens-would-pay-for-trumps-wall/

    In addition, Camarota said the IRS each year pays out billions to illegal immigrants in refundable child tax credits and the earned income tax credit.

    While Democrats complain the $18 billion price tag for the Trump wall is too high, the “Dreamers” amnesty bill they want Trump and Republicans to pass in exchange for funding the wall (or ideally in spite of the wall) would cost US taxpayers even more than the construction of the border partition over 10 years.

    “The cost of the DREAM Act has been estimated as very large — a $26 billion net cost in the first 10 years,” Camarota noted.

    Indeed, the Congressional Budget Office recently estimated that 3 million DREAM Act recipients would receive an estimated $12 billion-plus in ObamaCare subsidies, more than $5.5 billion in Medicaid benefits, $5.5 billion in earned-income and child-tax credits and more than $2 billion in food stamps.

    A bipartisan bill incorporating the deal was defeated in the Senate last month by a vote of 54-45. Trump rejected the proposal in favor of a tougher border bill introduced by Sen. Chuck Grassley (R-Iowa), which limits the number of DACA beneficiaries to 1.8 million, curbs family visas, or so-called chain migration, and phases out the diversity visa lottery, while earmarking $25 billion in funding for the wall and other border security.

    All of this is about the greedy cheapskate skinflints who want cheap labor and they have forced us to subsidize their business operation. The Democrats and Republicans who object to the wall have been bought by these cheapskates.

    Comment by dscott — March 10, 2018 @ 7:38 pm

  4. CNN Hasn’t Updated Its ‘Trump Jobs Tracker’ Since The Beginning Of January

    http://dailycaller.com/2018/03/10/cnn-trump-jobs-tracker/?utm_source=Twitter&utm_medium=Social&utm_campaign=atdailycaller

    The last time someone updated the tracker was Jan. 5, when the economy had only added 1,839,000 jobs since Trump took office. Under that pace, according to CNN, Trump is “off track” to fulfill his promise that he’d help create “25 million jobs in 10 years, or 208,333 jobs per month.”

    Yeap, I’m thinking what he’s thinking…

    Comment by dscott — March 10, 2018 @ 8:26 pm

  5. Great catch.

    With 2018 revisions, the economy has actually added 543K jobs since then: Februarys 313K, January’s revised 239K, 27K in December (up from 148K in CNN’s graph), and -36K in November (written down from 252K to 216K in January).

    Comment by Tom — March 10, 2018 @ 9:11 pm

  6. Maybe you can embarrass CNN for the next 7 years by posting a monthly cumulative job count since January 2017?

    We should be publicly enjoying their misery, after all they covered up the nation’s misery for 8 years, it’s only fair.

    Comment by dscott — March 11, 2018 @ 8:09 am

  7. Trump Tariffs Cost 5 Jobs for Single Job Gained, Analysis Finds

    http://dailysignal.com/2018/03/09/trump-tariffs-cost-five-jobs-for-single-job-gained-analysis-finds/

    In reading these articles about tariffs being bad, I think this is all based on the lead up to the Great Depression of the 1930s. That Depression was based on US and European countries trying to game the trade system by slapping tariffs on imports in order to give their crony business leaders an advantage on price and/or increase their profit margins. We must never forget or lose context in trade matters when it comes to the elites, they are cravenly selfish and greedy and they buy the politicians who will give them their desire. We call that system a plutocracy.

    The protection measures used then weren’t very sophisticated as they are today with subsidies and dumping. Meaning the lessons learned then in the 1930s don’t necessarily apply today. Here is a case where foreign governments have engaged in clever ploys to “artificially” either make US exports to their country more expensive or their imports to the US less expensive. As a free trader and globalist, “artificially” interfering in the cost of products and services is NOT Free Trade. Hence Trump is fully justified in slapping on tariffs to create a negotiating position to end the clever ploys. Just because two wrongs don’t make a right, doesn’t mean we should allow their wrong to continue. Trump is going to force a better deal with NAFTA or scrap it for individual bilateral deals. Negotiating against a group clearly pits one party against many and that is a disadvantage. Bilateral deals are one to one affairs with changes the negotiation dynamic pitting groups against each other capitalizing on their fear of being underbid by another because their’s is no longer the only game in town.

    We should also recognize the very people who are saying it’s bad are the ones who profit from a rigged trade system. When the game is rigged you can make the rules work for you because it is a sure thing. Hence the banks and brokerage houses invest in certain ways to maximize their profits. Any change in the rules means all of their investing strategies are upset and they have to lose a sure thing. No one likes losing a sure thing. The plutocracy isn’t going take this laying down. What is good for GM in NOT good for America, it never was it was only good for the ones who owned the stock and those politicians who were bought to enhance the dividend and capital valuation.

    Comment by dscott — March 11, 2018 @ 11:40 am

  8. I was thinking that wasn’t post-worthy, but since I learned that the CNN Digital layoffs occurred in Feb., it seems clear that they stopped tracking it because they didn’t want to, not because they don’t have the staff (tho they might not now).

    Comment by Tom — March 11, 2018 @ 12:03 pm

  9. It cannot be emphasized enough that trade isn’t “free” if one of the two parties involved is a government.

    The free trade models assume that both parties involved are primarily motivated to maximize profits. When a government is involved, there are other, often sinister motivations.

    It has become clear that some foreign governments are all too glad to lose money if it will cause U.S. plants to close and industries to shutdown. Steel and the machine tool industry are the best examples.

    Trade with China isn’t free. The People’s Army controls most major businesses. In their heart of hearts, they would like nothing better than to bury the U.S. steel and metals industries (foundries, etc.) once and for all, and then deny us access to those product to shut down other industries and cripple the economy.

    Comment by Tom — March 11, 2018 @ 1:16 pm

  10. [...] as I explained in Friday and Sunday posts at my home blog, the underlying raw (i.e., not seasonally adjusted) numbers are [...]

    Pingback by BizzyBlog — March 11, 2018 @ 3:08 pm

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