February jobs report – good against only expectations

By Steve Eggleston

Yesterday, the February jobs report was released. On a seasonally-adjusted basis, the economy added 175,000 jobs, with 162,000 coming in the private sector.

Meanwhile, the unemployment rate ticked up by 0.1 percentage points to 6.7% as 264,000 people entered or re-entered the workforce and employment increased by only 42,000. That was not enough to move either the Labor Force Participation Rate or the Employment-Population Ratio from January’s historically-low 63.0% LFPR and 58.8% EPR.

Economists had expected roughly 150,000 jobs added with cold weather affecting the numbers, with those taking the weak economic news from the ADP payroll report and the ISM Services report into account predicting even fewer jobs added. Despite the stronger-than-expected toplines, Reuters didn’t disappoint the weather alarmists, blaming the cold for a drop in the number of hours worked.

Even though the toplines were better than expected, the report itself threw cold water on those who thought it was a great number (emphasis added):

Establishment Survey Data

Total nonfarm payroll employment rose by 175,000 in February. Job growth averaged 189,000 per month over the prior 12 months.

Further, Tom Blumer found the results wanting compared to history. On a seasonally-unadjusted basis, the 750,000 total jobs and 300,000 private-sector jobs represent the worst February since 2010, which was also the last month that there was a loss of jobs on a seasonally-adjusted basis.

The phenomenon of a significant increase in jobs in February is a relatively-recent one, going back only to 1995. This February’s 0.52% increase, while a bit better than the mean average of 0.51% between 1995 and 2013, is in the bottom half of performances and worse than the median of 0.54%.

What isn’t a recent phenomenon is the February-June hiring spree Tom talked about. The number of jobs increased by an average of 2.70% in those months between 1948 and 2013. While the prior 3 years were a bit better than that, if things continue the way they went last month, the economy will be struggling to increase the number of jobs by 2% in that stretch.