The nation’s payrolls grew by a greater-than-expected 175,000 last month, while the unemployment rate ticked up slightly to 6.7%, according to today’s jobs report from the Bureau of Labor Statistics.
In a report that has both good and bad news for the American workforce, February payrolls appeared to shake off analysts’ cold-weather concerns, adding a solid 175,000 jobs and revising job counts for the prior two months up by a total of 25,000. Another notable positive in the February report was the 0.4% increase in average hourly wages over the prior month, and a 2.2% increase, year-over-year. If this sticks, it will bring a bit a paycheck relief to many struggling workers.
On the downside, the number and share of long-term unemployed increased last month, to 37% of the unemployed and 2.5% of the labor force, up from 2.3% in January. Importantly, this increase is occurring after Congress has allowed extended unemployment insurance benefits to lapse.
Though payrolls posted a decent number for February, it’s always important to average over a few months to get a clearer signal from the underlying trend. Over the past three months, payrolls are up about 130,000 per month on average, compared to over 200,000 for the prior six months (see figure below). It’s also worth noting that hours worked per week slipped a bit last month, though this is likely because some full-timers experienced weather-related schedule disruptions.
For these reasons, and not withstanding February’s better payroll number, I remain concerned that the pace of job growth may have downshifted in recent months. Yes, weather adjustments may have played a role in this downshift, but that is looking somewhat less the case as per incoming data (e.g., weather-sensitive construction was up 50,000 in January and 15,000 last month).
I’ll get to a deeper dive later and add some sectoral analysis, but one very notable observation in that regard is the fact that over the past three months, health care has added a measly 18,000 jobs. Prior to that, the average monthly gain for this sector over the past few years has been around 20,000. Whether this is a structural downshift in an industry that has been the most steady job contributor in the whole labor market, and whether it’s linked to the recent deceleration in the growth of health care spending, is yet to be seen.