Total nonfarm payroll employment increased by 678,000 in February, an improvement over the strong 467,000 jobs added in January, according to the latest jobs report from the U.S. Bureau of Labor Statistics. The unemployment rate in February decreased 0.2 percentage points from January to 3.8%.
Doug Duncan, chief economist at Fannie Mae, said the growth in nonfarm payrolls recorded its largest monthly gain since July 2021.
“Payroll growth over the prior two months was revised upward by a combined 92,000,” says Duncan. “Job gains were broad-based across sectors, with the leisure and hospitality (+179,000), education and health services (+112,000), and professional and business services (+95,000) sectors being the biggest gainers.”
Zonda chief economist Ali Wolf says the February report highlights the “resilience of the American economy,” as businesses are hiring, wages are increasing, and consumers are spending money.
“What we need to watch, however, are the implications of such a strong economy, namely inflation, which is at the highest level in 40 years,” Wolf says.
The number of unemployed individuals, 6.3 million, decreased approximately 200,000 compared with January.
Among the unemployed, the number of persons on temporary layoff, 888,000, was little changed compared with the previous month. The number of permanent job losers was also relatively unchanged from January at 1.6 million. Both measures are higher than their pre-pandemic February 2020 levels of 780,000 and 1.3 million, respectively.
The number of long-term unemployed individuals was also essentially unchanged during the month, standing at 1.7 million, but was 581,000 higher than in February 2020. The long-term unemployed accounted for 26.7% of the total unemployed in February 2022.
The labor force participation rate in February was 62.3%, up 0.1 percentage points from January. The employment-population ratio edged up to 59.9% during February. Both measures remain below their February 2020 levels—63.4% and 61.2%, respectively. Duncan says hourly earnings grew at a 5.1% year-over-year pace in February, down from January’s pace, but “still quite strong nonetheless, and a clear sign that firms are still looking to hire.”
The number of persons not in the labor force who currently want a job declined by 349,000 to 5.4 million in February, slightly above the February 2020 level of 5 million. The number of discouraged workers, a subset of the marginally attached who believe that no jobs were available for them, was little changed from January at 391,000.
According to the Household Survey Supplemental Data, the share of employed persons who teleworked because of the pandemic decreased to 13% in February from 15.4% in January. During February, 4.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, a significant decline from 6 million individuals in January. Among those not in the labor force in February, 1.2 million persons were prevented from looking for work due to the pandemic, down from 1.8 million in the previous month.
Job growth was widespread in February, led by gains in leisure and hospitality, professional and business services, health care, and construction.
The construction industry added 60,000 jobs in February; overall, construction employment is 11,000 below its February 2020 level.
“The residential construction sector (including specialty trade contractors) saw job growth of 31,000 in February, the fastest pace since March 2021, though some of this gain was potentially a rebound from January’s lackluster growth owing to unseasonably cold weather.”
Duncan says the February report gives the Federal Reserve “more than enough confidence in the labor market to start raising the policy rate” at its March meeting.
“Economists are watching to see if the policy changes by the Federal Reserve expected to start later this month and some easing of supply chain challenges help get inflation levels back to a range that is deemed healthy,” says Wolf.
