March 10, 2017 – The Employment Situation gives the most comprehensive look at the labor market in the U.S. This report tracks new jobs, additions or subtractions from the labor force, the unemployment rate, as well as average hourly earnings and hours worked. There are implications for consumer purchasing power, spending on goods and services, and productivity.
The labor market posted large gains in February coming in at plus 235,000, sharply above the consensus expectations of 200,000 new jobs. January was revised upward to 238,000 (+11,000). The increase reflected strong job gains in construction (+58,000), professional & business services (+37,000), and manufacturing (+28,000). Retail, however, shed 26,000 jobs last month. The unemployment rate fell one tenth to 4.7%, in line with expectations. The participation rate ticked upward by 0.1% in January to a 63.0% mark. Average workweeks of all employees on private nonfarm payrolls constant at 34.4 hours in February. This was in-line with consensus expectations. Average hourly earnings posted a flat rate of 0.2% after January’s figure was revised up by 0.1 points. This did, however, come in below expectations of 0.3% growth.
Not only did unemployment go down, which can be a deceiving indicator, but the participation rate went up too. This marks a 0.3% increase over the last two months. Construction has added just shy of 100,000 jobs the past two months, which is 19.87% of all jobs added. Overall, the 473,000 jobs added marks the best back-to-back month increases since last June/July. The most noteworthy implication of this report, though, is the effect on a March Fed rate hike. Chances were as low as 8% at the beginning in February but, after this report, the market has raised its implied odds to 100%. It seems all but certain that there will be another rate hike during the FOMC meeting March 14-15.