The Employment Situation for February – Weather The Right Signals

The Bureau of Labor Statistics (BLS) released the Employment Situation report for February. The establishment survey showed payroll employment expanded by 175,000 in February and the prior two months were revised upward for a combined increase of 25,000. From the household survey, the unemployment rate reversed last month’s decline, rising back to 6.7% from 6.6% in January. The labor force expanded by 264,000, the number of employed persons increased by 42,000, and the number of unemployed persons rose by 223,000.

The return to more robust growth in February payrolls is a positive signal after the disappointing slowdown in December and January. Indicators from the household survey regarding missed work due to bad weather suggest that the February gain could have been larger absent winter storms during the month. These “missed” jobs could provide a boost to payroll growth in the March report.

The increase in the unemployment rate could be a blessing in disguise if it represents the beginning of more consistent growth in the labor force, drawing back discouraged workers who have given up the job search in recent years.

In any event the uptick in the unemployment rate will have no impact on the Federal Reserve’s pace of reductions in bond purchases. An expanding labor force will bolster the Fed’s confidence, rather than undermine it, that the recovery is proceeding, and the Fed will continue its measured reductions in the pace of bond buying at the upcoming March meeting.

Today’s report is not as strong as it might have been but still has plenty of positive signals.



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