By Alan Beaulieu – ITR Economics
The January-to-February increase of 275,000 in the number of persons employed on non-farm payrolls, including the government and private sectors, created quite a stir in the media, owing to the fact it was above a consensus estimate and above the 230,000 average for the last 12 months. The words “robust” and “swelled” were among the adjectives used in some media releases.
Job increases from January to February occurred in health care (67,000), government (52,000), food services and drinking places (42,000), social assistance (24,000), construction (23,000), transportation and warehousing (20,000), and other areas. The above accounts for 228,000 out of the total 275,000 jobs added in February.
In Context
The rate of growth is the slowest in just under three years
The increase in the number of people employed was eye-catching, but the underlying trend tells a slightly less robust story. The year-over-year growth rate in the monthly data (1/12) is 1.8%, the slowest rate of rise in just under three years. The 12MMT is at a record high 157.808 million people working, but here the rate of growth (12/12) has slowed to 2.1%, the mildest growth rate in just over two years. From another perspective, the January-to-February increase of 0.17% is about average, but the mildest since 2019. The decelerating rise may catch the attention of the Federal Reserve Board, which could weigh favorably in terms of a decline in the federal funds rate.
The unemployment rate increased to 4.1%
An increase in the unemployment rate may help inform the Fed’s decision to lower interest rates, though it seems likely that they will want to see the unemployment rate move higher over the next few months. The 4.1% rate is a full percentage point higher than the April 2023 low of 3.1%.