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Economy Adds 236K Jobs in February; Unemployment Rate Slips

The economy added 236,000 jobs in February and the unemployment rate slipped to 7.7 percent, its lowest level since December 2008, the ""Bureau of Labor Statistics (BLS)"":http://www.bls.gov/news.release/archives/empsit_03082013.pdf reported Friday. Economists had forecast payrolls would grow by 160,000, and that the unemployment rate would drop to 7.8 percent.

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Job growth for December, originally reported at 196,000, was revised upward to 219,000, while January was revised down to 119,000 from the originally reported 157,000.

Average weekly hours rose along with average hourly earnings.

One concern from the report was the number of multiple jobholders, which increased 340,000. This means new jobs went to an individual already employed, making the decline in the unemployment rate even more significant.

The total labor force dropped 130,000 in February, a combination of 300,000 fewer persons unemployed and 170,000 more persons employed.

Typically if an increase in the unemployment number results in an increase in the total labor force, the unemployment rate goes up, suggesting the increase in unemployment came from individuals who were not looking for work and thus not in the labor force. The drop in the number of unemployed and in the unemployment rate should be more sustainable.

The report showed no impact of sequester related cuts, which began March 1, although total growth was held back by 10,000 fewer government jobs. Most of the government jobs cut were at the state and local levels.

According to the report, average weekly hours for all employees rose to 34.5 from 34.4 while average hourly earnings rose five cents, a strong increase in aggregate earnings. With the end of the payroll tax ""holiday"" in January, disposable income available for consumption was reduced.

While the unemployment rate improved, the employment-population ratio, which compares employment to the entire over-16 population, was unchanged at 58.6 percent.

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When the recession hit in December 2007, the ratio was 62.7, which meant then that 31.3 percent of those over 16 were not employed compared with 41.4 percent in January.

The report showed strong gains in professional and business services, including an increase of 16,000 temporary jobs, following a drop of 3,000 such jobs in January. An increase in temp jobs suggests employer uncertainty and a reluctance to add permanent jobs. Adding permanent jobs would depend on increased demand as employers base hiring decisions on revenue and profit per employee.

The simple distinction between jobs and employment--more apparent in state and local reports--is that employment is based on the location of the employer and jobs based on the residence of the worker.

The strongest gain in payroll jobs came in the professional and business sector, which added 73,000 jobs compared with 16,000 in January. The construction sector, buoyed by stronger home values and home sales, added 48,000 jobs, the strongest month-over-month increase since March 2008.

According to the report, bank underwriting jobs also slipped in February but total real estate jobs increased. The two lowest paying industry sectors--retail trade and leisure and hospitality--added about 24,000 jobs apiece, including about 19,000 restaurant jobs.

The 340,000 month-over-month increase in the number of multiple jobholders was the strongest since January 1996. At the same time, the number of self-employed workers fell 42,000, the third straight month-over-month decline.

The unemployment rate for people who did not graduate high school fell to 11.2 from 12.0 percent in January. The unemployment rate for college graduates was reported at 3.8 percent, up from 3.7 percent in January. College graduate are more likely to own homes than those who do not have college degrees, so the drop in that unemployment rate could show up in improved mortgage delinquency statistics.

The unemployment rate has added significance with the announcement by the Federal Reserve that the target fed funds rate would remain at its historic low, 0 to 0.25 percent, at least until the unemployment rate fell below 6.5 percent. The Fed also set an inflation target for keeping rates low.

As evidence of lingering labor concerns the number of persons out of work for 27 weeks or longer, long-term, increased 89,000, and the average duration of unemployment rose to 36.9 weeks from 35.3 weeks in January. The ranks of the long-term unemployed increased to 4,797,000.

_Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 am and again at 9:40 am eastern time._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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