Mixed Bag in the February Jobs Report

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Following a 172,000 job gain in January, the economy generated 242,000 jobs in February. Despite financial markets turbulence and economic weakness abroad, the strong job numbers in recent months suggest that the U.S. economy remains on track.

Another positive development is the further improvement in labor force participation. Half a percentage point increase since September suggests that we may be seeing a true recovery as opposed to just noise in the data. More discouraged workers are starting to look for work again, preventing the unemployment rate from falling despite strong employment growth. As the labor markets get tighter, the downward trend in the unemployment rate is becoming more moderate. However, we expect the unemployment rate to continue moving down to about 4.5 percent by the end of 2016.

Today’s job report also included some disappointments and concerns. First, average hourly earnings declined in February, slowing the wage acceleration momentum. Second, average weekly hours fell as well. And finally, the number of jobs in the Temporary Help industry, one of the best leading indicators of employment, declined for the second month in a row.

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