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March 10, 2006
Payroll employment up 243,000
February nonfarm payroll employment increased by 243,000 in February according to the Bureau of Labor Statistics.
Link to report--note, this address is not the archived version
Labor force participation and the employment to population ratios were little changed (LFPR was up 0.1%), and the unemployment rate moved up from 4.7% to 4.8%.
Average hourly earnings were up 5 cents from $16.42 to $16.47 with the largest percentage gains going to the professional and business services sector. Manufacturing jobs and wages continue to decline. (See Mark Thoma for some more details on where the growth in jobs is or is not.)
That 243,000 jobs were created in February is good news. PGL is happy that even more entered the labor force (which explains why the unemployment rate ticked up slightly). Of course we are talking about data from two different sources--the household survey definitely being the more noisy of the two. So while I always hesitate to put too much emphasis on one month's data, the developing trend does have me cautiously optimistic. I feel better about the labor market than when I woke up this morning.
The bond market is taking it fairly well. One would expect that a positive job report would give more ammunition to those who want the Fed to take rates higher. Yields are a little higher today, but apparently it will take more than this to undo the inversion. As Barry Ritholtz reminds us, the Fed's decisions are going to be dependant on incoming data such as this. He's also watching the bond market very closely on this one. As of this moment, the 10 year yield is up 4 basis points. That's significant, but hardly an overreaction. I think the market is responding appropriately and recognizing that we are slowly, gently, edging towards a higher definition of "neutral" interest rates for monetary policy. That could be a good thing. If the target is edging higher, the risk of overshooting is lower. We could be close to a "soft landing."
The 243,000 jobs exceeded expectations a little, but not by too much so as to jolt the bond market. It is very good news.
Posted by William Polley at March 10, 2006 12:47 PM
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Comments
Yep - I was a Happy Bear this morning. AB may have to pull the plug on my posting!
Posted by: pgl at March 10, 2006 2:37 PM
but hours worked actually fell and the smoothed 3 month growth rate is now 2.3% vs 2.4% over the past year.
Interestingly, if you look at the smoothed hours worked data it has been amazingly stable over the past year at about a 2.4% annual rate.
Posted by: spencer at March 11, 2006 7:54 AM
Or, since jobs are the last thing to pick up in the economic cycle, maybe this strong number is a sign we're near the end of this 3+ year bull market.
Posted by: muckdog at March 12, 2006 3:49 PM