The US economy lost -63k jobs in February, with private payrolls plummeting a huge -101k. The drop in private payrolls was the largest since March 2003. The savior here was government payrolls which grew an above trend 38k (though with tax revenues falling, it is not clear this will continue). February's drop in payroll employment was the largest since March 2003 (5 years ago). Large declines were seen in goods-producing jobs (-89k), manufacturing (-52k, largest decline in almost 5 years), construction (-39k, 8th straight monthly decline), trade and transport services (-39k), retail trade (-34k, largest monthly loss in 5 years and seasonal adjustments suggest that true layoffs were huge in this area), temporary help (-28k) and business services (-20k). Education and health did had 30k new jobs, while leisure grew by 21k. This is the second month in a row that the economy has shed jobs. The diffusion index, below 50 for the second month in a row, also indicates that the job losses have been widespread across many industries. January's loss has been increased to -22k from the originally reported -17k. In addition, December's job gains were revised in half to +41k.
The drop in the unemployment rate to 4.8% from 4.9% (consensus had looked for a rise to 5%), was due to a large drop in in the labor force of -450k, while the household measure of jobs only fell -255k. This indicates that as many as half a million people have become discouraged in finding employment and simply stopped looking for work last month. The length of the average job search has increased to over nine months from 7 months. So, the drop in the unemployment rate was not positive.
The average workweek held steady at 33.7 hours, as expected. Manufacturing hours held steady at 41.1 for the third month in a row, and overtime also held steady at 4 hours for the third month in a row. Aggregate hours though continued last month's decline, falling -.1% MoM. The continuing drop in aggregate hours suggests further weakening of GDP output this quarter, or an improvement in productivity.
Average hourly earnings rose +.3% MoM and 3.7% YoY, the same growth rates as the prior two months. Average weekly earnings also rose +.3% MoM and 3.7% YoY, a pick up from the prior month. This steady growth is unlikely to be an inflation concern, as it remains below headline CPI. But it does indicate that worker's purchasing power and standard's of living are being slowly eroded.
Today's data supports continued belief that the US has entered a recession.
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