Payrolls Up 192,000; Unemployment Down to 8.9%

The Bureau of Labor Statistics reported that non-farm payroll employment rose by 192,000 in February. This follows an upwardly revised gain of 63,000 in January (previously reported to be 36,000). The month’s payroll gain was the strongest since the Census Bureau hiring of last year. Private sector employment rose by 222,000, the strongest growth since last April. Furthermore, the job gains were broad based with virtually all major industry sectors showing growth, including manufacturing and construction.

If this rate of job growth continues, then the unemployment rate should begin to start moving downward. It takes about 125,000 jobs created each month to absorb new labor market entrants. Though job growth momentum seems to be building, there remain significant risks, rising oil prices being one of them.

Jim Chessen, ABA Chief Economist stated, “Today’s job report is good news and shows improvement across a broad swath of the economy. However, the risk of even higher oil prices, for an extended period of time, may create enough uncertainty to slow hiring.”

In February, the unemployment rate fell 0.1 point to 8.9% following a large drop in January. Though the payroll growth seen in February is consistent with a modest unemployment rate decline, the drops in previous months are not likely as positive of an indication. Over the past few months, about three quarters of a million people have left the labor force. This is likely due to survey effects related to inclement weather and to increased levels of discouraged workers. The labor force participation rate remains at a cyclical low of 64.2%. If this rate begins to move upward back to a historical norm, even will solid payroll growth, the unemployment rate may start to move up in the near to intermediate future.

	Feb	Jan	Dec	Nov	Oct	Sep
Payroll Change (000s)	192	63	152	93	171	-29
Goods Producing	70	35	4	8	1	-6
Services	122	28	148	85	170	-23
Private Sector	222	68	167	128	143	109
Unemployment Rate	8.9	9.0	9.4	9.8	9.7	9.6
Labor Force Particip. R.	64.2	64.2	64.3	64.5	64.5	64.7