The best news in the February employment report is what it did not show: new signs of an economic slowdown. Both the December and January employment reports found weak job growth. The February report, however, showed moderate hiring.
The payroll survey found employers added 175,000 net new jobs in February. This falls below average job growth rates in 2013 (+194,000/month), but represents a substantial improvement over December (+84,000) and January (+129,000). The past two months now look more anomalous than harbingers of a new recession.
The strongest job growth occurred in the professional and business services (+79,000), leisure and hospitality (+25,000), and education and health services (+33,000) sectors. Government employment also expanded (+13,000).
February’s severe weather had little effect on the employment figures. Even construction—a sector heavily affected by climate conditions—added 15,000 jobs. This happened because of how the government measures employment. The Bureau of Labor Statistics (BLS) counts a worker as employed if a firm pays him for even one hour of work during the pay-period. Consequently severe weather typically has little effect on employment figures unless employees miss a work or more of work. However, the polar vortex did affect average hours worked—which fell 0.1 hours over the month.
The household survey found unemployment increasing by 0.1 percentage points to 6.7 percent (a statistically insignificant change). Both the employment-to-population ratio and the labor force participation rate remained unchanged at historically low levels. The increased unemployment makes it less likely the Federal Reserve will step back from quantitative easing in the near future.
Unlike the payroll survey, the household survey found job growth almost flat in February after increasingly substantially in January. This probably reflects statistical noise. The household survey has a smaller sample size and larger margin of error than the payroll survey. Consequently it shows much larger changes in job growth month-to-month, although over longer periods of time the two surveys track each other well.
Teenage unemployment (21.4 percent) rose to its highest level since October 2013, raising doubts about the wisdom of President Obama’s proposal to raise the minimum wage to a historically unprecedented level. Unemployment among government employees remained low at 3.2 percent. Once again government employees have the lowest unemployment rate of any occupation.
Today’s numbers are hardly cause for celebration, but they do ease fears of a labor market slowdown—something America’s 10.4 million unemployed workers could hardly afford.