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The U.S. jobs report for February disappointed with the lowest NFP jobs since Sept 2017 with just 20k new jobs under an expected 190k and down from January's robust 311k new NFP jobs. It had been the best four month stretch of gains since 2014. Unemployment fell to 3.8% 48 year lows.


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Despite the Fed having raised rates two months ago, market chaos and the government shutdown and the resultant uncertainty with Federal Reserve President Powell's seem unsure of the path for wages. In October American wages hit their highest levels in a decade at 3.1%, this trend continued as expected in December. The December numbers were also expected to get a Thanksgiving and Christmas lift as retailers hire hundreds of extra staff to cope with the upcoming holiday season. With that January was expected to see 190,000 NFP jobs.

The market expected the February report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of 190,000 new jobs. Logic suggested a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is at a 48 year low on higher with higher participation and the two month NFP revision was -12,000 change to jobs.

February 2019 U.S. Employment Report

 US Jobs Feb 2019

Employment:

  • Non-farm payrolls  +20k vs +190K expected, Prior 311K (revised from 302K)
  • Unemployment rate  3.8% vs 4.0% expected/prior
  • Participation rate  63.2% vs 63.2% expected.prior (highest since 2014)
  • Underemployment rate 7.3% vs 8.1% prior
  • Two month net revision +12K prior
  • Private payrolls +25k vs 206K prior

Wages:

  • Average hourly earnings 3.4% y/y vs 3.3% exp, Prior 3.2% y/y
  • Average hourly earnings +0/.4% m/m vs +0.3% m/m exp (prior +0.1%)
  • Hours worked  34.4 vs 34.5 expected Prior hours worked 

US Jobs Feb 2019 Earnings by Industry

Household Survey Data

The unemployment rate declined by 0.2 percentage point to 3.8 percent in February, and the number of unemployed persons decreased by 300,000 to 6.2 million. Among the unemployed, the number of job losers and persons who completed temporary jobs (including people on temporary layoff) declined by 225,000. This decline reflects, in part, the return of federal workers who were furloughed in January due to the partial government shutdown. 

Among the major worker groups, the unemployment rates for adult men (3.5 percent), Whites (3.3 percent), and Hispanics (4.3 percent) decreased in February. The jobless rates for adult women (3.4 percent), teenagers (13.4 percent), Blacks (7.0 percent), and Asians (3.1 percent) showed little or no change over the month. (See tables A-1, A-2, and A-3.) 

In February, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.3 million and accounted for 20.4 percent of the unemployed. (See table A-12.) The labor force participation rate held at 63.2 percent in February and has changed little over the year. The employment-population ratio, at 60.7 percent, was unchanged over the month but was up by 0.3 percentage point over the year. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) decreased by 837,000 to 4.3 million in February. This decline follows a sharp increase in January that may have resulted from the partial federal government shutdown. (Persons employed part time for economic reasons would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.) (See table A8.)

In February, 1.4 million persons were marginally attached to the labor force, a decrease of 178,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the last 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 428,000 discouraged workers in February, little changed from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.0 million persons marginally attached to the labor force in February had not searched for work for reasons such as school attendance or family responsibilities. (See table A-16.)

US Jobs Feb 2019. Industry

Establishment Survey Data

Total nonfarm payroll employment was little changed in February (+20,000), after increasing by 311,000 in January. In 2018, job growth averaged 223,000 per month. In February, employment continued to trend up in professional and business services, health care, and wholesale trade, while construction employment declined. (See table B-1.)

In February, employment in professional and business services continued to trend up (+42,000), in line with its average monthly gain over the prior 12 months.

Health care added 21,000 jobs in February and 361,000 jobs over the year. Employment in ambulatory health care services edged up over the month (+16,000).

In February, wholesale trade employment continued its upward trend (+11,000). The industry has added 95,000 jobs over the year, largely among durable goods wholesalers.

Employment in construction declined by 31,000 in February, partially offsetting an increase of 53,000 in January.

In February, employment declined in heavy and civil engineering construction (-13,000). Over the year, construction has added 223,000 jobs. Manufacturing employment changed little in February (+4,000), after increasing by an average of 22,000 per month over the prior 12 months. 

In February, employment in leisure and hospitality was unchanged, after posting job gains of 89,000 and 65,000 in January and December, respectively. Over the year, leisure and hospitality has added 410,000 jobs.

Employment in other major industries, including mining, retail trade, transportation and warehousing, information, financial activities, and government, showed little or no change over the month. The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.4 hours in February. In manufacturing, the average workweek declined 0.1 hour to 40.7 hours, while overtime was unchanged at 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls fell by 0.2 hour to 33.6 hours. (See tables B-2 and B-7.)

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to $27.66, following a 2-cent gain in January. Over the year, average hourly earnings have increased by 3.4 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 8 cents to $23.18 in February. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for December was revised up from +222,000 to +227,000, and the change for January was revised up from +304,000 to +311,000. With these revisions, employment gains in December and January combined were 12,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 186,000 per month over the last 3 months.

The Employment Situation for March is scheduled to be released on Friday, April 5, 2019, at 8:30 a.m. (EDT).

February 2019 ADP National Employment

  • ADP National Employment Report: Private Sector Employment Increased by 183,000 Jobs in February
  • Private sector employment increased by 183,000 from January to February, on a seasonally adjusted basis.

ADP Feb 2019

 

Other US February Employment Component Releases

  • ISM non-manufacturing employment 55.2 vs 57.8 prior
  • ISM manufacturing employment 52.3 vs 50.3 prior
  • US Initial Jobless Claims 223K vs 225K estimate Prior 226K  
  • Continuing claims 1755K vs 1772K estimate, prior week 1805K
  • The four-week average fell to 226.2 5K versus 229.25K last week.
  • Consumer confidence jobs hard to get 11.8 vs 12.6 prior
  • Conference board help wanted online demand for hiring 104.6 vs 103.7 prior
  • December JOLTS 7335K vs 6888k prior US February
  • Challenger Job Cuts +117.2% v +18.7% y/y prior via Challenger, Gray, and Christmas Inc
  • Layoffs 76.84k Prior 52.99k Job cuts jump 45% higher than in January, retailers lead job cuts, with autos next citing restructuring as main reason for layoffs. Incl US army cutting over 50,000 jobs.
  • Last month’s job cuts are 117 percent higher than the 35,369 cuts announced in February 2018. It is the highest monthly total since 105,696 cuts were recorded in July 2015, primarily due to the U.S. Army’s cutting over 50,000 jobs and tanking oil prices, causing thousands of cuts in the Energy sector.

 

Source: AFP, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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