U.S. Payroll Employment Growth Picks Up in February, but Earnings Gain Eases & Unemployment Rate Edges Higher

Nonfarm payrolls increased 151,000 (1.3% y/y) during February after rising 125,000 in January, revised from 143,000, and 323,000 in December, revised from 307,000. Expectations had been for a 160,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 199,700 in February, down from 236,300 in January.

Average hourly earnings rose 0.3% during February after increasing 0.4% in January, revised from 0.5%. These increases came after a 0.2% December rise, revised from 0.3%. Earnings growth of 4.0% y/y remained up from 3.6% in July, but below the 5.9% high in March 2022. A 0.3% February increase had been expected.

The unemployment rate, measured in the household survey, edged up to 4.1% last month and reversed the January dip to 4.0%. The Action Economics Forecast Survey expected 4.0%. It reached a low of 3.5% in July of 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, rose to 8.0% from 7.5%.

In the payroll survey, private-sector employment rose 140,000 (1.2% y/y) in February following an 81,000 January gain. Construction sector employment increased 19,000 (2.0% y/y) last month after rising 2,000 in January. Factory sector payrolls gained 10,000 (-0.7% y/y) after falling 5,000 in January.

Private service-producing employment increased 106,000 (1.4% y/y) last month after increasing 88,000 in January. Increases varied greatly amongst service sector categories. Private education & health service jobs rose 73,000 (3.5% y/y) while trade, transportation & utilities employment rose 21,000 (1.0% y/y). Financial activities jobs rose 21,000 (1.0% y/y) and information sector employment rose 5,000 last month (-0.3% y/y). Leisure & hospitality employment fell 16,000 (+1.5% y/y) while professional & business service jobs declined 2,000 (-0.4% y/y). Temporary help services jobs weakened 12,300 (-5.6% y/y).

Government sector payrolls increased 11,000 (1.5% y/y) in February after rising 44,000 in January. Local government jobs improved 20,000 (1.5% y/y) last month while state government employment rose 1,000 (2.2% y/y). The number of federal government jobs declined 10,000 (+0.5% y/y).

The 0.3% February rise in private-sector average hourly earnings reflected a 0.3% gain (4.2% y/y) in the goods-producing sector. Earnings in construction improved 0.2% (4.2% y/y) last month and factory sector earnings rose 0.4% (4.2% y/y). In the private services sector, earnings rose 0.3% (4.0% y/y) after rising 0.4% in January. Information sector earnings held steady (4.6% y/y) and professional & business service-sector earnings rose 0.3% (5.1% y/y). Trade, transportation and utilities pay improved 0.3% (2.7% y/y). Leisure & hospitality earnings rose 0.3% (3.7% y/y). Financial sector earnings increased 0.5% (4.2% y/y) while private education & health services earnings edged 0.1% higher (4.1% y/y).

The length of the average workweek in the private sector held at 34.1 hours last month. The workweek in the goods-producing sector was steady at 39.7 hours for the fifth straight month. The construction sector average workweek eased to 38.6 hours from 38.8 hours. The factory sector workweek was 40.1 hours for the fourth consecutive month while average weekly overtime hours edged up to 2.9 hours. The average workweek in the private service sector held at 33.1 hours. The aggregate weekly hours index in the private sector, a key indicator of production and income, rose 0.1% last month (0.6% y/y) after a 0.2% decline in January.

In the household survey, the rise in the jobless rate to 4.1% in February from 4.0% in January reflected a 588,000 decline in employment which followed a 2.234 million January rise. The labor force fell 385,000 last month following a 2.197 million January increase. The unemployment rate for teenagers rose to 12.9%, while for individuals aged 20-24, the rate increased to 8.3%. The jobless rate for workers aged 25-54 edged up to 3.5% but for workers 55 and over, it eased to 2.9% in February.

The labor force participation rate fell to 62.4% during February, the lowest level since January 2023. The employment/population ratio for all workers fell to 59.9% in February. It remained below its high of 61.1% in February 2020, just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.

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