U.S. Payroll Employment Remains Respectable During February; Jobless Rate Moves Higher

Nonfarm payrolls increased 275,000 (1.8% y/y) in February following a 229,000 January increase and a 290,000 rise in December, revised from 353,000 & 333,000, respectively. Expectations had been for a 195,000 rise in the Action Economics Forecast Survey. The three-month average change of 265,000 is the highest since June of last year.

Average hourly earnings edged 0.1% higher last month after rising 0.5% in January, revised from 0.6%. A 0.2% February gain had been expected. The 4.3% y/y earnings increase remains below the 5.9% peak in March 2022.

The unemployment rate, measured in the household survey, moved up to 3.9% in February following three straight months at 3.7%. It compared to an expected rate of 3.7%. Household employment fell 184,000 after rising 239,000 in January. The labor force rose 150,000 after a 124,000 January gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons rose to 7.3% from 7.2% in January. It was the highest rate since December 2021.

In the establishment survey, private-sector employment increased 223,000 (1.6% y/y) after rising 177,000 in January. Construction sector employment increased 23,000 (2.8% y/y) following a 19,000 January gain. Mining & logging sector jobs held steady (+1.1% y/y) after falling 3,000 in January. Factory sector employment fell 4,000 (+0.2% y/y) after an 8,000 increase.

Private service-producing sector employment improved 204,000 in February (1.7% y/y) after increasing 153,000 in January. Increases varied greatly amongst service sector categories. Education & health service jobs rose 85,000 (4.2% y/y) while leisure & hospitality employment rose 58,000 (2.8% y/y). Trade, transportation & utilities employment gained 40,000 (0.2% y/y) while professional & business service jobs increased 9,000 (0.7% y/y). Government sector payrolls rose 52,000 last month (2.8% y/y) with local government jobs up 38,000 (2.3% y/y).

Private-sector average hourly earnings edged 0.1% higher (4.3% y/y) in February after a 0.5% January gain. Earnings in the goods-producing sector rose 0.1% (5.2% y/y). Earnings in construction slipped 0.1% (+4.7% y/y) but factory sector earnings rose 0.2% (5.3% y/y). In the private services-sector, earnings inched 0.1% higher (4.0% y/y), held back by a 0.5% decline (+1.8% y/y) in information sector earnings.

The length of the average workweek rose to 34.3 hours in February after falling sharply to 34.2 hours in January. The workweek in the goods-producing sector rose to 39.7 hours and recovered January’s decline. The construction sector average workweek rose to 38.9 hours but that remained down from November’s high of 39.3 hours. The factory sector workweek edged up to 39.9 hours. The average workweek in the private service sector rose to 33.3 hours and reversed its January decline. The aggregate weekly hours index, a key indicator of production and income, rose 0.4% (1.0% y/y) and reversed its decline in January.

The household survey indicated a rise in the jobless rate to 3.9% as the size of the labor force rose slightly. The labor force participation rate held at 62.5% for the third straight month. It remained below the high of 63.3% early in 2020.

The employment/population ratio for all workers eased to 60.1% in February, slightly below where it was twelve months earlier. It remained below its reading 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.