U.S. Employment Report
The February jobs report is something of a perfect storm for the U.S. economy and is likely to further fuel bullish fervor across the stock market. At the same time the bond market can dwell upon a lift in the rate of unemployment and the still stable outlook for inflation to fight off accusations that the Federal Reserve will soon be tightening policy. The latest strength in the stock market appears to have been driven by hopes that what the winter took away, the spring will reclaim in terms of a jobs rebound. Today’s employment report compounds such expectations.
The creation of 175,000 new jobs comfortably beat forecast and offered decent signs of core economic strength. And even though the report delivered a net two-month positive revision of 25,000 additional jobs, the headline rate of unemployment rose by one-tenth to 6.7% as more individuals came back to the labor force but were unable to find work.
In addition, the gain in professional hiring rose to 79,000, which is the strongest jump in a year. Employment within education and healthcare rose by 33,000 to make February the strongest reading for six months. Construction, manufacturing and government jobs all gained despite clear evidence from within the reading that the landscape was scarred by the weather.
During February some 601,000 employees were not at work according to the government report – the most since 2010. During the survey week some 6.9 million people worked less than the full week on account of adverse weather conditions, which is the highest reading since 1978. The labor force participation rate remained at 63.0%, which under the circumstances of a blip-up in the headline rate of unemployment is decent news, but clearly the encouraging labor news has a long way to run before we can claim the employment horizon has fully cleared up.
Chart – Payrolls accelerate in the key professional sector