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Job Gains Surprisingly Strong in February

Job Gains Surprisingly Strong in February

The U.S. economy added more jobs in February than economists predicted, especially for a short month.

According to the Bureau of Labor Statistics (BLS), 678,000 employees were added to payrolls in February 2022, well above the roughly 400,000 jobs forecast by experts. Additionally, revisions to January and December added another 92,000 jobs to the economy. Since the first few initial months of the post-lockdown recovery, an average of about 515,000 jobs have been added each month (October 2020 to present).

The bulk of February’s new jobs (26.4%) were in the lower-paying Leisure and Hospitality industry with solid contributions from the Education and Health Services, and Trade, Transportation, and Utilities industries. The Professional and Business Services industry added 95,000 jobs in February, or about 14% of the monthly total.

The U3 or headline unemployment rate fell to 3.8% in February from 4% last month as the number of unemployed fell from 6.51 million in January to 6.27 million. The civilian labor force participation rate increased for the second consecutive month, moving from 62.2% to 62.3%. Still, the rate is well below pre-pandemic levels of around 63.4%. The employment-population ratio also improved, inching up to 59.9% from 59.7% in January.

The unemployment rate for adult men decreased 30 bps to 3.5% from January, while the rate for adult women was unchanged for the second straight month at 3.6%. The rate for teenagers fell 60 bps from January as the majority of job gains for February were in the Leisure and Hospitality sector.

With the influx of lower-paying service jobs in February, the monthly change in average hourly earnings was just $0.01, after averaging about $0.14 per month for the past twelve months. On an annual basis, average hourly earnings were up $1.54 (to $31.58). That was 5.1% greater than last February’s rate and the sixth consecutive month above $1.40. However, the CPI index including food and energy rose 7.5% in January, and the war in Ukraine has many concerned for increased energy prices going forward.

Industry wage growth varied greatly with Leisure and Hospitality wages jumping 11% for the year, while Financial Activities employees registered only a 1.9% annual increase. Competition for fewer restaurant and other service workers had had a dramatic effect on wage growth. Transportation and warehousing workers enjoyed a 7.7% annual increase in hourly wages and retail trade wages were up 7.1% but most other industries averaged a 4.5% increase.

Several industries reported unadjusted unemployment rates higher than the month before as seasonal hiring abated from January to February. Some notable exceptions were the Mining and Logging, Construction, Professional and Business Services, and Manufacturing industries. Each dropped at least 40 bps in February. Currently, the highest industry unemployment rate (not seasonally adjusted) is in Construction (6.7%) although Leisure and Hospitality (6.6%) is not far behind. The lowest was in the Government industry (1.8%).

The percentage of workers that telework fell back in February as the effect of the Omicron variant began to diminish. January’s teleworking rate of 15.4% decreased to 13%, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. Still, the rate of telecommuting will likely continue to remain elevated compared to historical norms as employers discover that remote working can act as a hiring and retention inducement that boosts employee morale while productivity remains close to previous levels.

In other February BLS data, the number of unemployed leaving or quitting their job increased slightly from 952,000 in January to 963,000 in February. The number of unemployed for 27 weeks or longer also ticked up slightly from 1.69 million in January to 1.70 million in February. The number of those working part-time that want full-time work rose by 418,000 from last month to about 4.14 million, while the number of workers who prefer part-time positions increased by 469,000 to about 20.7 million.

Workers marginally attached to the labor force fell by about 446,000 from last February to 1.496 million and the number of discouraged workers stood at 393,000, down 136,000. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.

The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, inched up to 7.2% in February compared to 7.1% last month and 11.1% in February 2021.

Industry Focus

Just like last month, the service elements of the economy continued to dominate the jobs recovery with the bulk of February’s gain in the Leisure and Hospitality, Education and Health Services, and Trade, Transportation and Utilities industries. With more states relaxing mask mandates, patrons are eager to return to restaurants, theaters, and shopping centers. The goods-producing industries had a solid month with strong gains in Manufacturing, Construction, and even Mining and Logging.

 

 

  • More than 69% of the Leisure and Hospitality industry’s monthly gain of 179,000 jobs were in food services and drinking places (+123,700) with another 27,500 jobs added in the accommodation subsector. The arts, entertainment and recreation sector added 28,000 jobs for the month, 21,900 of them in the amusements, gambling and recreation subsector.
  • The Education and Health Services industry’s monthly gain of 112,000 jobs were largely in the ambulatory health care services sector (+53,600), with solid gains in home health care services and offices of physicians. The social assistance sector added about 30,700 jobs, dominated by individual and family services (+20,700). Educational services added 17,600 jobs for the month as more school reopenings occurred around the country.
  • The Trade, Transportation and Utilities industry added 103,000 jobs in February with the largest portion in transportation and warehousing (+47,600). Six of that sector’s 10 subsectors gained at least 5,000 jobs for the month. Retail trade added 36,900 jobs for the month, led by building materials and garden supply stores (+12,100) and department stores (+8,900). However, general merchandise stores lost 10,000 in February. Wholesale trade added 18,300 jobs for the month with durable goods accounting for 10,000 of them.
  • The Professional and Business Services industry gained 95,000 jobs in February with more than half of them in the lower-paying administrative and waste services sector (+50,800). The temporary help services subsector accounted for 35,500 of those jobs. The professional and technical services sector added 32,000 jobs, mostly in management and technical consulting services and scientific research and development services.
  • The Construction industry got back on track, adding 60,000 jobs in February, with a big gain of 44,200 jobs in specialty trade contractors – both residential and nonresidential. The remaining construction subsectors added from 2,200 to 7,300 jobs for the month.
  • The Manufacturing industry’s gain of 36,000 jobs in February was about half and half durable (+20,000) and nondurable (+16,000) goods. Strong gains in fabricated metal products (+10,500), machinery (+8,000), and a few other subsectors were somewhat offset by a loss of 18,000 jobs in motor vehicle manufacturing as automakers continue to struggle with semiconductor shortages and other supply issues. Nondurable goods manufacturing gains were mainly in food manufacturing (+7,200).
  • The Financial Activities industry added 35,000 jobs in February with much of that gain coming from real estate and rental leasing (+18,800). The finance and insurance sector added another 16,200 jobs to the total for the month.
  • The Other Services sector had another solid month with 25,000 jobs added in February. Personal and laundry services added 8,600 and membership associations and organizations added 7,700 jobs for the month, but the largest contribution was from the repair and maintenance subsector (+9,500).
  • Local Government employment accounted for most of February’s 24,000 gain, with local government education contributing 14,800 jobs. Another 6,300 jobs were added to local government employment, excluding education, while state government added only 3,000 jobs for the month and Federal hiring was flat.
  • The Mining and Logging industry gained 9,000 jobs in February, with most of that gain in the support activities for mining (6,100) subsector. Oil and gas extraction added another 2,400 jobs for the month.
  • The Information industry was a net zero for employment change in February, with gains in the publishing (+1,300) and broadcasting (+1,300) subsectors canceled by losses in telecommunications (-1,500) and data processing (-1,000) subsectors.