United States: Payrolls extend strong streak and unemployment falls to 5.5%
March 6, 2015
Non-farm payrolls grew by 295,000 in February, which was above January’s downward revised increase of 239,000 (previously reported: +257,000). Moreover, the reading overshot market expectations of a 230,000 increase in payrolls and marked the 12th consecutive month of gains above 200,000, the longest such streak since the mid-1990s.
The private sector was almost entirely responsible for new hiring, having added 288,000 jobs in February. The largest gains were registered in leisure and hospitality, professional business services, education and health services, retail, and construction. The public sector gained 7,000 jobs. The U.S. economy now has 2.8 million more people employed than at the pre-crisis January 2008 peak.
The unemployment rate—derived from a different survey—decreased from 5.7% in January to 5.5% in February, which marked the best result since May 2008. The market had expected the unemployment rate to fall to 5.6%. February’s result brings the unemployment rate into the Fed’s target zone of 5.2%-5-5%, reflects ongoing economic growth and will put further pressure on the Fed to begin raising interest rates. However, the labor market may not be as strong as the headline numbers suggest. Labor participation rates still remain notably low and while average hourly earnings inched up in February, wage growth has been largely stagnant over the past months.
Author: Carl Kelly, Economist