BLS Jobs Numbers Analysis, February 2018

Another Bright Spot In a Multi-Year Period of Growth

The labor market report released by the Bureau of Labor Statistics (BLS) today shows surprisingly strong employment growth in February 2018. Total nonfarm payrolls increased by 313,000, over 100,000 more than analysts had predicted. Furthermore, the initial employment estimates for December (160,000) and January (200,000) were revised upward by a combined 54,000 jobs. This is the 89th month of continual job gains, which is a new record.

The unemployment rate has remained steady since October 2017, with 4.1 percent of the labor force out of work and actively seeking new employment. This means that the higher employment numbers likely reflect more workers reentering the workforce after a period of time away.

The average wage for all employees on nonfarm payrolls grew 2.6 percent over the previous year, slightly slower than January’s 2.8 percent which galvanized controversy over whether the low unemployment rate and tight labor markets would finally start substantially spurring wage growth, which could lead to increased inflation. It appears, however, that the workers re-entering the job market are meeting employers’ needs enough to mitigate large-scale wage growth.

It is still important to recognize that average wage growth statistics fail to capture the specific stories happening in different industries and regions. For example, the average weekly earnings of production and nonsupervisory employees on private, nonfarm payrolls increased by 3.1 percent over the past year, but this conceals the difference between the increase in the private service-providing sector (2.9 percent) and the goods-producing sector (3.7 percent). Similarly, the lower growth in the entire service-providing sector masks the higher growth in average wages in more narrowly-focused service sectors, such as leisure and hospitality (4.2 percent) and transportation and warehousing (4.0 percent). It’s also important to note that this wage growth does not include the highly-publicized one-time bonuses that some corporations gave workers following the recent federal tax reform (discussed further here).

All in all, this month’s BLS job report stands out as a bright spot in an already glowing 7.5 year-long period of job growth.

Learn more: Don't miss Bruce Yandle's quarterly economic report for March, 2018.