The AEC Lens
Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More »
U.S. Economy Adds Nearly One-quarter of a Million Jobs in February
March 7th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup
A significant milestone has just been reached in the U.S. labor market. For the latest week ending February 27th, America’s initial jobless claims figure was less than 300,000 for the 52nd week in a row.
That’s a whole year of strong success in keeping the number of people newly unemployed quite low. (In the Great Recession of 2008-2009, the number topped off at 670,000.)
Falling below their 300,000 benchmark level, rosy initial jobless claims automatically imply encouraging news from the Employment Situation Report published by the Bureau of Labor Statistics (BLS).
The BLS has just reported that in February, the total number of jobs in the U.S. rose by 242,000, where a gain of 200,000 or more is considered bullish.
The national unemployment rate stayed below 5.0% at 4.9%, the same as in January. A year ago, it had been 5.5%.
In another positive sign, the proportion of working-age people who actively sought employment in February moved a little higher, to 62.9%. This measure is called the ‘participation rate’ and it usually picks up when job prospects are good.
(On the flip side, when job prospects are abysmal, people stop looking for work and the result is a ‘discouraged worker’ effect.)
The services-producing side of the economy provided all, and more, of the net jobs improvement in the latest month, +245,000. Goods-production employment stood still.
Within goods production, an enlarged payroll for construction (+19,000) was almost entirely offset by a shrinkage along manufacturing production lines (-16,000).
Construction recorded a jobless rate in February that was elevated (8.7% not seasonally adjusted or NSA), but that’s normal at this time of year when winter weather will often take a bite out of onsite activity levels. In the same month of last year, construction’s jobless rate was 10.6%.
Manufacturing’s unemployment rate early this year is 4.7%, half a percentage point better than in February 2015 (5.2%).
To close out goods-production, ‘mining’ jobs (i.e., the category that includes ‘oil and gas extraction’) dipped by 19,000, with most of that decline coming in ‘support activities’ (-16,000).
As part of their efforts to shore up their balance sheets, with the price of their products so low, oil and gas firms are continuing with staffing reductions.
Among ‘services’, the three biggest jobs contributors in the latest month were ‘education and health’ (+86,000), ‘retail trade’ (+55,000) and ‘leisure and hospitality’ (+48,000).
There was a decent jump (+28,000) in employment at school facilities, although it wasn’t as great as for ‘health care and social assistance’ (+57,000). The bellwether sub-category of ‘hospitals’ added 11,000 jobs.
Whereas year-over-year employment in the U.S. economy is now +1.9% for ‘total’ and +2.5% for ‘services’, it is a considerably faster +3.7% for ‘hospitals’.
Retail trade employment was led higher by ‘food and beverage stores’ (+15,000) and ‘clothing and clothing accessories stores’ (+11,000). These improvements are indications of a general populace with an increasing proclivity to pamper itself.
That observation is also borne out by the surge in hiring that is taking place at ‘food services and drinking places’ (+40,000), within the ‘leisure and hospitality’ category. The party animals among us − myself included, of course − are rejoicing.
The government sector took on more workers (+12,000) in the latest month, all by local authorities as a staffing increase at the federal level (+5,000) was counter-balanced by the states (-5,000).
Other year-over-year percentage changes in employment among major sub-sectors are as follows: ‘professional and business services’, +3.2%; ‘education and health services’, +3.1%; ‘leisure and hospitality’, also +3.1%; ‘financial activities’, +1.8%; ‘transportation and warehousing’, also +1.8%; ‘information services’, +1.2%; and ‘government’, +0.3%.
For ‘construction’, the figure is +4.1%, and for ‘architectural and engineering services’ firms, where projects are prepared ‘on paper’ first before groundbreaking proceeds, +3.0%.
‘Manufacturing’ employment is currently a paltry +0.3% year over year. The high-valued U.S. dollar, combined with global trading that is stumbling rather than striding, is holding back manufactured goods export sales.
The nearly one-quarter million jobs increase in February should provide justification for an imminent interest rate hike by the Federal Reserve. Except for one anomaly.
There is still little upward movement in wage rates.
For all non-farm private payrolls in the economy, average hourly and average weekly earnings year-over-year in February were +2.2% and +1.6% respectively. Eliminating supervisory personnel, the results were +2.4% and +2.1% respectively.
For construction, the comparable percentage changes are +2.4% and +2.0% when bosses are included and +2.9% and +2.1% when they are not.
All of the foregoing compensation increases continue to be modest.
Usually the most recent monthly labor market results for Canada are published on the same day as for the U.S. and I comment on what’s been happening north of the border at the same time.
It just so happens that February 2016 is one of those months that breaks with the pattern.
Statistics Canada won’t be providing its findings for another week, at which time I will gleefully scour through that data set.
I would anticipate one likely conclusion. For the Bank of Canada, the bias for interest rates will stay downwards rather than upwards.
Category: CMD Group