The labor market is still far from perfect, but it took another major step forward last month. Payrolls were up 227,000 in February (288,000 including upward revisions to prior months). Meanwhile, civilian employment, an alternative measure of jobs that includes small business start-ups, increased 428,000.
Some of that gain was weather-related. The household survey shows weather kept 178,000 people away from work last month; in a typical February, this number averages 311,000. But even if we subtract the difference (133,000) from civilian employment, we’re still left with a gain of 295,000 — strongly supporting the case that the payroll data, if anything, are under-reporting improvement in the labor market. Payroll gains have averaged 168,000 in the past year, versus a gain of 193,000 per month for civilian employment.
Meanwhile, the labor force increased 476,000 in February and is up 1.3 million in the past year. As a result, the unemployment rate held steady at 8.3 percent in February, despite robust job gains. Total hours worked increased 0.2 percent in February and are up 2.7 percent from a year ago. That, combined, with continued increases in wages per hour, means total wages are up 4.6 percent in the past year, more than enough to outpace inflation (for the time being).
One detail in the report might capture the improvement best: The share of unemployed who quit their prior job is up to 7.9 percent, the highest since late 2008. That’s what we should expect to see as attitudes about the job market improve: More workers who are confident they can leave their current position and find a better one. Meanwhile, the share of unemployed workers who are either new entrants to the labor force or re-entrants hit 36.6 percent, the highest since August 2008.