In this morning’s Employment Situation Report, nonfarm payrolls expanded by 242K in February, versus 195K expected and 151K previous. Last month’s print was also revised up by 21K.  Payroll figures derived from the household survey put in another very strong reading, up 530K versus 615K last month.  While Mining employment fell by 19.2K (driven by declines in support services, -15.9K MoM) and Manufacturing employment declined by 16K (after a +23K reading in January), other sectors were strong. Construction added 19K, after 146K jobs created in Q4 and 15K in January. Services payrolls expanded by 245K, driven by 55K additional retail trade workers and solid prints from other sectors.

Wages Summar

But the real concern from the report was wages. Instead of rising 0.2% MoM as expected by economists (versus +0.5% last month), they fell -0.1%.  Below we show a summary of the wage changes for production and non-supervisory employees.  As shown, the worst wage prints came from higher-paid sectors. One possible driver is that bi-monthly paychecks were not delivered during the survey week, and in prior months where the 12th has fallen on a Friday (as it did in February) reported average hourly earnings for that month have been weak relative to when the 12 falls on any other day . If that is the case, and the jobs print is a better indication of how strong the labor market is, we can expect to see more confident rhetoric from Fed speakers in the coming weeks.  Certainly, the jump in the labor force is a positive indicator as the Labor Force Participation rate has risen 5 months in a row.  In our view, it’s no coincidence that the LFPR has bounced just as wages began to edge up.

LFPR vs Wages

Print Friendly, PDF & Email