Job Growth Remains Strong, but Rise in Unemployment Creates Mixed Picture


Job growth news remained positive in February, with companies adding nonfarm payroll workers at the continued strong pace of 275,000 last month, but less robust than January’s 353,000 new jobs; unemployment also broke its hold-steady pace, rising 3.9%, creating a mixed picture of a potentially softening labor market. This, according to the latest jobs report from the U.S. Bureau of Labor Statistics, released Friday.

Gains:

The latest data showed job gains occurred in health care, government, food services and drinking places, in social assistance and in transportation and warehousing.

Unemployment snapshot:

According to the report, the number of unemployed people increased by 334,000 to 6.5 million. A year earlier, the jobless rate was 3.6%, and the number of unemployed people was 6.0 million.

Among the major worker groups, the unemployment rates for adult women (3.5%) and teenagers (12.5%) increased over the month. The jobless rates for adult men (3.5%), Whites (3.4%), Blacks (5.6%), Asians (3.4%), and Hispanics (5.0%) showed little or no change in February.

Among the unemployed, the number of permanent job losers increased by 174,000 to 1.7 million in February. The number of people on temporary layoff was little changed at 827,000. The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was little changed in February. The long-term unemployed accounted for 18.7% of all unemployed people.

More key statistics from the report::

  • Health care added 67,000 jobs in February, above the average monthly gain of 58,000 over the prior 12 months. In February, job growth continued in ambulatory health care services (+28,000), hospitals (+28,000), and nursing and residential care facilities (+11,000).
  • Government employment rose by 52,000 in February, about the same as the prior 12-month average gain (+53,000). Over the month, employment continued to trend up in local government, excluding education (+26,000) and federal government (+9,000).
  • Employment in food services and drinking places increased by 42,000 in February, after changing little over the prior 3 months.
  • Social assistance added 24,000 jobs in February, about the same as the prior 12-month average gain of 23,000. Over the month, job growth continued in individual and family services (+19,000).
  • Employment in transportation and warehousing rose by 20,000 in February. Couriers and messengers added 17,000 jobs, after losing 70,000 jobs over the prior 3 months. In February, job growth also occurred in air transportation (+4,000), while warehousing and storage lost 7,000 jobs. Employment in the transportation and warehousing industry is down by 144,000 since reaching a peak in July 2022.
  • In February, employment continued to trend up in construction (+23,000), in line with the average monthly gain of 18,000 over the prior 12 months. Over the month, heavy and civil engineering construction added 13,000 jobs. 
  • Retail trade employment changed little in February (+19,000) and has shown little net change over the year. Over the month, job gains in general merchandise retailers (+17,000); health and personal care retailers (+6,000); and automotive parts, accessories, and tire retailers (+5,000) were partially offset by job losses in building material and garden equipment and supplies dealers (-6,000) and electronics and appliance retailers (-2,000). 

What the experts are saying:

“The latest jobs figures displayed a mixed picture, said NAR Chief Economist Lawrence Yun. “Another solid 275,000 net new payroll jobs were added in February. There are 5.5 million more jobs now compared to the pre-COVID record high in early 2020. However, the unemployment rate went up to 3.9% because a different measurement of jobs from a household survey (rather than a company survey) showed 184,000 fewer workers. The monthly wage rise of 0.14% was the slowest in two years, though the annual wage gain of 4.3% is above the consumer price inflation of 3.1%. Job additions build up the long-term real estate demand for housing, retail spaces, warehouses, and hotel travel, but not necessarily for office spaces. The short-term timing of purchase is dependent upon mortgage rates and inventory availability. Home sales recorded the lowest activity in 2023 in nearly 30 years. Note that there are 158 million payroll jobs today compared to 117 million when home sales were similarly low. It implies sizable potential real estate demand on the sidelines, ready to pounce once short-term conditions move favorably.”

Realtor.com Chief Economist Danielle Hale commented: 

“The February jobs report continued January’s trend of better than expected payroll growth. While the 275,000 jobs added in February fell short of January’s original blockbuster 353,000 figure, the January data was revised down to 229,000, so February hiring did show an uptick from the revised figure. February job gains also exceeded the 230,000 monthly average for the previous 12 months and were most notable in health care, government, food services & drinking, social assistance, and transportation & warehousing. Unemployment increased to 3.9%, its highest level since January 2022, but still below the full employment rate of 4%.  Taken together, the data point to a still healthy jobs market, but less risk of overheating.

“Other labor market data out this week show similar trends back to normal. In January, job openings were essentially unchanged at 8.9 million, down from 10.4 million the prior year. The job openings rate was also steady over the month at 5.4%. Job quits held steady at 3.4 million while the rate shrank to 2.1%. While openings remain elevated, quits levels and rates are within pre-pandemic range. 

“At January’s Fed meeting, no rate change was announced, as the Fed sought additional confidence that inflation is on a path to its 2% target. Following that meeting, inflation surprised to the high-side, kicking off a wave of concern that Fed rate cuts would be delayed. This also sparked increases in longer-term interest rates, including mortgage rates. Steadiness in the labor market has increased the Fed’s attention on the price stability side of the dual mandate. This means next week’s inflation data is an important signal for what’s ahead and whether the first Fed rate cut will be in June or later in the year.

“Average hourly earnings for private employees grew by 4.3% in February. With inflation running at 3.1% in January, this means that workers have once again seen real growth in their spending power over the last year. However, the cost of buying a home has still outpaced wage growth, rising 5.4% in February. One key to bringing down housing and rent costs is adding more homes to the market. Realtor.com’s analysis of housing supply and household formation suggests that the U.S. has built between 2.5 and 7.2 million fewer homes than households over the last decade. Adding more housing would alleviate cost-pressure on one of the biggest budget items for families, taking the pressure off of inflation,” Hale concluded.   





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