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.
|Payroll Change (000s)||192||63||152||93||171||-29|
|Labor Force Particip. R.||64.2||64.2||64.3||64.5||64.5||64.7|