Jobs numbers are out for February and they beat expectations, with the unemployment rate hitting a four-year low.
According to the Labor Department, total nonfarm payroll employment increased by 236,000 and the unemployment rate fell to 7.7%. Expectations were for total payrolls at 160,000 or 165,000 and unemployment holding steady at 7.9%.
So should we get out the confetti and celebrate? You can decide, but in the accompanying interview, Chris Varvares, senior managing director of economic research firm Macroeconomic Advisers certainly wasn’t.
“Solid but unspectacular,” is how he described the February report to The Daily Ticker. He points out that while the numbers beat expectations, when you put them together with the revisions for the prior month (In January, 157,000 jobs were revised down to 119,000) the jobs added were in-line with the recent track record of jobs gains at about 200,000 per month.
One positive trend Varvares pulled out of the report was the breadth of jobs added. The BLS reports job gains were driven during the month by professional and business services, with gains in construction and healthcare, too.
In addition, he says the February numbers hint at an acceleration in improvement of the labor market.
It’s important to remember, though, that the sequester has yet to have any concrete impact on the labor market.
Before it went into effect March 1, the nonpartisan CBO said it would cost 750,000 jobs this year and would cut 0.6% from the economy’s growth.
Varvares points out that the “silver lining,” so to speak may be that rather than layoffs, it looks like the government will use furloughs to cut spending. So workers may lose income but not join the unemployment rolls.
Varvares estimates the $85 billion in cuts over the rest of the fiscal year could amount to between 500,000 and 600,000 job losses, which could add a couple-tenths of a percent to the unemployment rate.
It’s important to note that the labor force participation rate fell slightly in February, so Varvares estimates that actual gains in jobs accounted for half the decline in the unemployment rate.
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