The U.S. added 678,000 jobs in February while the national unemployment rate fell to 3.8%, according to data released Friday morning by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS).
What Happened: February’s uptick in job creation “was widespread, led by gains in leisure and hospitality, professional and business services, health care, and construction.” The number of unemployed people for February totaled 6.3 million.
The BLS acknowledged the latest numbers are below pre-pandemic levels; in February 2020, the month prior to the beginning of the COVID-19 crisis in the U.S., the unemployment rate was 3.5% and the number of unemployed persons was 5.7 million.
What Else Happened: Among the major demographic groups, the BLS reported declines in the unemployment rates for (3.5%) and Hispanics (4.4%), while The jobless rates for adult women (3.6%), teenagers (10.3%), Whites (3.3%), Blacks (6.6%) and Asians (3.1%) recorded little or no change from the previous month.
The number of persons who were jobless for less than five weeks dropped by 286,000 to 2.1 million last month while the number of long-term unemployed — defined as those who were out of work for 27 weeks or more — was virtually unchanged at 1.7 million, although it was also 581,000 higher than in pre-pandemic February 2020. The long-term unemployed accounted for 26.7% of the total number of unemployed people last month.
Also in February, 4.2 million persons reported were unable to work because their employer closed or lost business due to the pandemic, down from 6 million in January. Among this group, 20.3% received at least some pay from their employer for the hours not worked, down from 23.7% in January. The BLS also identified 1.2 million persons who said they were prevented from looking for work due to the pandemic, down from 1.8 million in the prior month.
See Also: Russian Invasion Creates 'Upward Pressure On Inflation,' Powell Says
What It Means: Reaction to the jobs data was mixed.
Joe Brusuelas, chief economist at RSM US LLP, observed, “The February increase in employment of 678,000-the three-month average is 582,333- and decline in the unemployment rate to 3.9% implies that there is ample room for the Federal Reserve to increase the policy rate by 25 basis points at its March 16, 2022, meeting despite the proliferation of risks to the domestic and economic outlook linked to geopolitical tensions.”
But Bruesalas warned it was difficult to make the case that hiring will continue at such a pace given the risks due to the war in Ukraine.
"Should that conflict evolve in such a manner that it results in a complete removal of the six million or so barrels per day that Russia exports — which we think is only a matter of days — from global markets, sending the price per barrel of oil soaring well above current levels, it is only a matter of time before there is a material change in the pace and composition of hiring in the American labor market. And that will shape the pace and magnitude the Fed’s policy normalization campaign this year," he said in an email.
George Ratiu, manager of economic research at Realtor.com, a unit of News Corp's (NASDAQ:NWSA) Move Inc. subsidiary, also saw both positive and negative aspects to the data.
"The figures underscore that we have almost two job openings for every unemployed person. The continued gain in #employment s welcome news for households grappling with rising #inflation and #housing costs. The main concern in February was that average hourly earnings remained mostly unchanged, following noticeable gains over the past six months. With higher costs for food, cars, gasoline, clothing and shelter, American families are getting financially squeezed," Ratiu said in a tweet.
Dr. Anthony B. Sanders, distinguished professor of real estate finance at George Mason University and former director and former head of asset-backed and mortgage-backed securities research at Deutsche Bank AG (NYSE:DB), took a reference from a Sergio Leone movie to spell out what the new data could mean for the near-term economy.
“The good: 678k jobs were added,” he wrote in his Confounded Interest blog. “The bad: Month-over-month wage earning experienced 0% growth (although YoY growth declined to 5.1%). The ugly: inflation is still at 40 years highs of 7.5%. Meaning that REAL wage growth is -2.4%.”
And Keith McCullough, CEO of Hedgeye Risk Management, was even more pessimistic, tweeting, “All this super late cycle jobs report ensures is the FED is going to make policy mistakes.”
