The labor isn’t progressing smoothly as indicated by the latest U.S. non-farm payroll: It showed a much higher than expected headline figure: 242K jobs were added in February. The ADP reported a gain of 214K jobs; the market anticipated 195K for February. The growth in wages dropped to 2.2% and wages slipped by 3 cents, month over month rate. The main sectors that expanded were in health care and social assistance, retail trade, food services and drinking places, and private educational services. The rate of unemployment remained flat at 4.9%. The U.S. dollar is slightly falling against other majors; gold and silver are also slightly up. Let’s breakdown this report:
The U6 unemployment measurement, a broader measure of unemployment, declined to 9.7%. In terms of revisions, there was a total upward revision of 30K for January and December combined.
Source: BLS
In February, the rate of U.S. unemployment was 0.6 percent points below the rate recorded in February 2014.
The number of unemployed persons also (7.815 million) rose by 24K in February compared to the previous month. The civilian labor force also picked up again by 555K. So there was a gain in number of people participating in the labor force and modest increase in the number of unemployed. In any case, the participation rate inched up again to 62.9%.
Finally, wages grew in February compared to January – the hourly earnings reached $25.35 per hour — a fall of 3 cent or 0.1%, month over month; wages rose by an annual gain of 2.2%, year on year – a lower rate than in previous months.
Final point
The recent NFP report showed, yet again, an unclear picture of where the labor market is heading: Wages fell, unemployment remained flat, but number of jobs added was higher than expected; also, participation rate and U6 improved. So the NFP wasn’t overall bad, nor was it too optimistic. Without higher wages, it will be hard to suggest the U.S. labor market is improving.
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