Solid Job Growth and Low Unemployment Rate in February

According to the Employment Situation for February 2018, reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment rose by 313,000 in February and the unemployment rate was unchanged at 4.1%.

Monthly growth in payroll employment in February jumped over 300,000 for the first time since July 2016. The three-month average job growth was 242,000 a month currently. Job growth was strong in February. Meanwhile, the unemployment rate remained at the historical low level for the fifth consecutive month. Today’s release confirms that the Fed is very likely to raise the short-term policy rate.

However, the strong job growth did not lead to a lower unemployment rate in February. As total nonfarm payroll employment rose, the civilian labor force expanded by 1% (806,000) in February, faster than the 0.1% growth of the population. As a result, the labor force participation rate, the proportion of the population either looking for a job or already with a job, increased by 0.3 percentage point over the month to 63.0% in February. The increase in the number of labor force reflected a 785,000 increase in the number of person employed and a 22,000 rise in the number of person unemployed over the month. In addition to job growth, as shown in the figure above, the chart below indicates that the decline in the labor force participation rate also contributed to decrease in the unemployment rate following the recession.

Monthly employment data released by the BLS Establishment Survey indicates that construction added 61,000 jobs in February, the largest growth since April 2007.

Meanwhile, residential construction employment rose by 25,400 in February, after a 19,600 increase last month. The January increase was revised from its original estimate of a 19,000 increase. Residential construction employment is now 2.80 million, broken down as 779,000 builders and 2 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 16,917 a month. Over the last 12 months, home builders and remodelers have added 107,500 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 816,600 positions.

In February, the unemployment rate for construction workers rose to 5.7% on a seasonally adjusted basis, higher than a 5.5% in January. After reaching a peak rate of 22% in February 2010, the unemployment rate for the construction sector has been trending downwards and remains historically low.



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