So was America’s February jobs report one of the strongest US payroll reports in months?
Or was it merely just average, with a continuing worry that wages remain weak?
It was certainly better than a year ago and continued the generally improving trend since last September.
Non farm payrolls rose by a solid 192,000 last month, with the jobless rate falling to 8.9% for the first time in almost two years.
And figures for previous months were lifted by 58,000.
But there was a feeling that the report fell short of being stunning and a real sign that the employment malaise in the US was over.
Some of the rise was a bounce after January’s snowstorms but average hiring in the past three months rose to 136,000.
That is fast enough to keep up with population growth and start to lower the unemployment rate.
In that respect it met the market’s optimism and economists now say the report and a flood of other positive data on the economy will see the Fed halt its current $US600 billion asset purchase program in June (which will be an effective tightening of monetary policy when that happens).
But no rate rise move.
But average hourly earnings rose by just one cent to $US22.87 and the average work week was flat at 34.2 hours: meaning no wages explosion of any sort and little impact on inflation (which is being boosted by higher commodity prices).
US manufacturing added 33,000 jobs as did construction, business services put on 47,000 jobs, healthcare created 40,000 new positions and the hospitality sector took on 22,000 employees.
State and local governments were a drag as they shed 30,000 jobs in February.
Another negative from the report was a further rise in the average duration of unemployment to 37.1 weeks, suggesting an increasing problem of long-term unemployment.
The rate of job losses seems to be accelerating as the local government budget crisis bites.
Government may become a further drag on job growth depending on how much of the $US61 billion in immediate spending cuts proposed by House Republicans are accepted by the senate and the president.
Canadian economist Dave Rosenberg
, "Allowing for a similar reading in March that we received in February would generate an average increase for the first quarter of around 150k. That is little changed from what employment gains averaged on a monthly basis in the fourth quarter.
"So while we are seeing positive job growth, it is not accelerating even though we are coming off the most intense impact of the fiscal and monetary easing that was unveiled late last year.
"In other words, we are disappointed with what is still a lacklustre trend in net job creation, particularly in view of the peak stimulus we are currently experiencing.
"What was particularly discouraging was the fact that both the wage number and the workweek were flat. Nominal wages, in fact, have been stagnant in three of the past four months. Weekly average earnings have also been flat or negative in three of the past four months. How on earth can these statistics possibly be viewed as bullish for the economy?
"The year-over-year-trend in average weekly earnings in the past three months has softened from 2.6% to 2.5% to 2.3% today.
"At the same time, it is probably reasonable to assume that surging food and fuel costs will bring headline inflation to, and possibly through, 3% in coming months.
"In other words, the growing risk of falling personal income in real terms, even with the positive growth in payrolls, is a glaring yellow light as far as the consumer spending outlook is concerned.
"Aggregate hours worked only managed to tick up 0.2% in February after a flat January. That is total labour input — bodies and hours.
"So assuming a trend-like productivity performance, we are talking yet again about sub-3% GDP growth, which by itself is okay but considering the peak impact of all the fiscal and monetary steroids being administered this quarter, it is actually disappointing.
"The unemployment rate dipped again to a 22-month low of 8.9% from 9.0% in January and the nearby high of 9.8% in November. This reflected a 250k rise in Household employment — the third increase in a row — and a flat participation rate.
"A couple of behind-the-scene facts: from October to February, an epic 700k people have left the work force. If you actually adjust for the fact that the labour force participation rate has plunged this cycle to a 27-year low the unemployment would be sitting at 12% today.
"Moreover the employment-to-population ratio — the so-called “employment rate” — stagnated in February at 58.4% and is actually lower now than it was last fall when “double dip” was the flavour du jour.
"All that matters in these employment reports is what the jobs environment means for income, because workers generally spend in the real economy. With credit harder to come by, and with fiscal policy soon to become more focussed on austerity, it is the income that the labour delivers that will prove to be the critical determinant of the economic outlook.
"So while the “spin” may be over near-200k headline payroll gains, another dip in the headline unemployment rate, the organic income backdrop can really only be described as tentative, at best, especially in real terms as gasoline prices make their way to $4 a gallon by the time Memorial Day rolls around."
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