February Jobs Exceed Expectations
Guest blog by Dr. Tom Cunningham, Economist and MST Senior Advisor
From any perspective, the February jobs report can only be viewed as “solid” and a signal of an optimistic business climate. New jobs in the U.S. numbered 235,000, exceeding expectations.
The headline unemployment statistic, U3, ticked down to 4.7 percent. The broader measure of labor underutilization, U6, which has been getting more attention in recent months and years because it includes all people who want work and part-time workers who would like full-time employment, fell 0.2 percentage points to 9.2 percent.
Gains were in construction, professional and business services, education, manufacturing, health care and mining. Construction and possibly mining were buoyed by favorable weather. On the other hand, retail lost some jobs and the other sectors were essentially unchanged. Average hourly earnings continued their climb, showing what is considered “decent strength,” up 2.8 percent from this time last year.
Overall, the report indicates a continuation of what we have been seeing over the last couple of years. No segment of the economy has gone into “bubble” mode, but we have enjoyed solid, if unspectacular, growth for some time.
Against this background, we’ve seen an interesting pattern in the high-frequency data releases, those virtually daily releases from various agencies that release economic statistics. For the first couple of months of the year, the data were coming in quite strong. Releases were persistently at or above market expectations. That took a decided turn at the end of February, starting with data on personal income that came in considerably weaker than anticipated. Since then releases have been pushing estimates of current activity down. However, we don’t make too much of this; data is noisy, and it is easy to imagine trends that turn out not to be real. One trend that does look real: Given the strength of this morning’s report and Fed Chair Janet Yellen’s comments last week, an interest rate hike at next week’s FOMC meeting would not be surprising.
About the Author
Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development of the MST Virtual Economist and is the MST Advisory economics specialist. Tom will be a featured speaker at the 2017 National ALLL Conference in May.
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