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Job Growth Remains Strong in February

Job growth exceeded 200,000 for the second consecutive month in February, with U.S. employers adding 235,000 nonfarm payroll jobs, according to the U.S. Department of Labor, Bureau of Labor Statistics Employment Situation report issued March 10.

exhibit
      1The unemployment rate dipped slightly for the month, from 4.8% to 4.7% (Exhibit 1). That rate has changed very little in the past year. A year ago the rate was 4.9%.

U.S. employers have now added jobs for 77 consecutive months.

The 235,000 new jobs in February and the 238,000 new jobs in January (revised up from 227,000) easily exceeded the 2016 monthly average of about 180,000 jobs, and slightly surpassed the 2015 average of 229,000 jobs (Exhibit 2).

exhibit
      2We believe continuing to add jobs at this pace will be difficult with an unemployment rate this low.

The average hourly earnings for all employees on private nonfarm payrolls moved up by $0.06 to $26.09, following a $0.05 increase in January (Exhibit 3).

Over the past 12 months, average hourly earnings have risen by $0.71, or 2.8%.

Here are some of the other key trends highlighted in the report:

  • exhibit
      3The number of unemployed persons looking for jobs edged down slightly from 7.6 million to 7.5 million for the month.
  • The civilian labor force increased by nearly 300,000 in February to 160.1 million, and the labor force participation rate inched up 0.1% to 63.0%. The employment-population ratio edged up 0.1% to 60.0%.
  • The labor force participation rate for those in their prime working years (age 25 – 54) moved up slightly from 81.5% to 81.7% in February, which is about 1.3% below the prerecession level (Exhibit 4).
  • The number of long-term unemployed (those jobless for 27 weeks or more) was nearly unchanged, moving from 1.9 million to 1.8 million in February, but remains at an elevated level (Exhibit 5). That accounts for 23.8% of the unemployed, which was down from 24.3% the previous month.
  • exhibit
      4The number of persons employed part time for economic reasons (also referred to as involuntary part-time workers) remains high, but dipped slightly from 5.8 million to 5.7 million in February (Exhibit 6).
  • The average workweek held steady at 34.4 hours, which is in a range comparable to that preceding the last recession (Exhibit 7).
  • Initial jobless claims, reported weekly, remained at an extraordinarily low level. In fact, jobless claims reached the lowest weekly level in almost 44 years during the final week of February (Exhibit 8). This is even more extreme if one adjusts for growth in the labor force. The 223,000 jobless claims reported for the week ended Feb. 25 was the lowest number since March 1973, according to the Department of Labor.

exhibit
      5Strong job growth had been a contributing factor in the Federal Reserve Board's decision to raise rates in December, as well as the expected rate hike when the Fed meets March 15.

We believe that if employment and other economic indicators remain strong, the Fed will make further rate hikes throughout 2017.

We believe that a series of small rate hikes during the year would be beneficial to net savers without materially affecting the economy or consumer spending.
exhibit 6, 7, 8

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