"Goldilocks": February Payrolls Smash Expectations, Soar By 313K But Hourly Earnings Miss

There was good and bad news in the just released payrolls report: on one hand, February payrolls soared by a whopping 313K, smashing expectations of 205K, and well above last month's upward revised 239K (from 200K). This was the biggest monthly increase since October 2015.

The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported.

The unemployment rate failed to drop to 4.0% as expected, remaining unchanged at 4.1%.

Here Goldman was right: the black unemployment rate dropped sharply, back to 6.9%, but even with that drop it was not enough to push the overall unemployment rate higher.

The reason for the flat unemployment rate is that the participation rate jumped notably, rising from 62.7% to 63.0%, the highest since September.

Now for the not so good news, which confirm that the February wage spike was to be short-lived, as hourly wages rose only 2.6% last month, below the 2.8% expected, with the February outlier of 2.9% also revised lower to 2.8%. This was in large part due to the increase in the workweek to 34.5 from 34.4 last month, which was a major reason for the spike in average hourly earnings in February.

The lack of notable wage growth even with the whopping payrolls addition confirms that a lot of slack still remains in the jobs market, or a return to the "Goldilocks" narrative, which as Bloomberg commentator Paul Dobson puts it, "Big beat on payrolls plus miss on average hourly earnings is great news for stocks (cheap labor) and may leave bonds/the dollar little changed."

Citi confirms:

"This favors the ‘goldilocks’ economy scenario – where the economy is not so hot it’s causing high inflation, but not so cold it’s causing recession concerns. It's "just right."

More details from the report:

Total nonfarm payroll employment rose by 313,000 in February. Job gains occurred in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.

In February, construction employment increased by 61,000, with gains in specialty trade contractors (+38,000) and construction of buildings (+16,000). Construction has added 185,000 jobs over the past 4 months.

Retail trade employment increased by 50,000 over the month. Within the industry, employment rose in general merchandise stores (+18,000) and in clothing and clothing accessories stores (+15,000). However, over the past 4 months, which traditionally see the bulk of the holiday hiring and layoff, employment in these industries has changed little on net. Elsewhere in retail trade, building material and garden supply stores added jobs over the month (+10,000).

Employment in professional and business services increased by 50,000 in February and has risen by 495,000 over the year. Employment in temporary help services edged up over the month (+27,000).

Manufacturing added 31,000 jobs in February. Within the industry, employment rose in transportation equipment (+8,000), fabricated metal products (+6,000), machinery (+6,000), and primary metals (+4,000). Over the past year, manufacturing has added 224,000 jobs.

Financial activities added 28,000 jobs over the month, with gains in credit intermediation and related activities (+8,000); insurance carriers and related activities (+8,000); and securities, commodity contracts, and investments (+5,000). Over the year, financial activities has added 143,000 jobs.

Employment in mining rose by 9,000 in February, with most of the increase in support activities for mining (+7,000). Since a recent low in October 2016, mining has added 69,000 jobs.

Employment in health care continued to trend up in February (+19,000), with a gain of 9,000 in hospitals. Health care has added 290,000 jobs over the past year.

Employment in other major industries, including wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.5 hours in February. In manufacturing, the workweek increased by 0.2 hour to 41.0 hours, while overtime edged up by 0.1 hour to 3.6 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.2 hour to 33.8 hours.

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.40 in February.

The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 242,000 over the last 3 months.


GotGalt kralizec Fri, 03/09/2018 - 15:36 Permalink

Absolutely.  The telling stat was the explosion upwards on the disability rolls once everybody's 99 weeks of unemployment insurance was up.  Huge pool of labor that will be forever out of the mix and just content on letting Uncle Sam feed and house them forever and ever.  Well, likely a decent % of them working under the table somewhere so that they can keep affording the new iPhone and a vacation or two each year along with the new car.  Total BS.

In reply to by kralizec

Oldwood Four Star Fri, 03/09/2018 - 09:29 Permalink

Things are not always the same as last time. There is no doubt that the economy is heating up, but what is different this time is that the so called "slack" in the labor market is being taken up by technology and automation. Wages are not rising because human productivity has peaked....actually over shot their peak by pretending individual productivity numbers are reflecting anything but the leverage that technology has provided....and that same technology is enabling humans to only become dumber by actually converting its operators to become ever more narrow in their skills and thinking....almost extensions of the technology itself.

The key is the fact that fewer than ever actually OWN their technology, instead relying on business owners to provide it (as well as the training). Where we used to own much of our tools AND the skills to operate them, fewer and fewer people actually find themselves in that position today. Most are using technology they barely (if at all) understand.

As a ever increasing percentage of our workforce become automation appendages, we will see their wages actually fall, being pitted against ever cheaper automation.

Recession will be inhibited by government's ability to borrow and transfer wealth to sustain entitlements that create a floor for wages AND a ceiling. The trajectory is set...and accelerating, and it will result in some serious reconciliation as no matter how efficient our technologies may be, they are still owned and controlled by others who have no real compunction to share. Once a substantial number of people have been moved from production to useless eater status, and the OWNERS have sufficient technology to make us redundant to their needs, the useless eaters will need to be eliminated, either by conflict of war or something more natural like famine and disease.

As individuals we have no control or impact on this trajectory, but we do have choices, either embracing state dependency and mental sloth, or get on board with this paradigm and as has always been the necessity, become a indispensable part of the process...something NOT easy, but as always in life NECESSARY.

In reply to by Four Star

Oldwood loveyajimbo Fri, 03/09/2018 - 09:57 Permalink

No, just 40 years of owning a custom furniture business, employing people for most of that time. Reality tends to leave a mark. Being a small shop (less than ten employees) I have continually introduced technology into my shop, encouraging employees to LEARN. But did ANY of them? NO. They simultaneous resented technology while enjoying how it eased their work and preserved their jobs, because without it I would have had no choice but go the route of so many other shops and hire illegal labor.

If we choose to be consumers or appendages to technology and not OWNERS, our future is set. And do not misunderstand. The "ownership" of technology does not necessarily imply physical ownership by document, but ownership in that YOU possess the skills not just to repeatedly press the button, but to make yourself indispensable to the operation of that technology, to understand how it works and how to make it work better.

Or you can just sit on your ass complaining, bitching of an all-powerful government, while DEMANDING it do something for YOU.

In reply to by loveyajimbo

poor fella Oldwood Fri, 03/09/2018 - 11:00 Permalink

Absolutely correct. This was also a big topic at Davos 2017.. 

It was discussed that lower educated workers could lever technology and big data to do many tasks normally taken up by specialists. For instance, paralegals doing the work of lawyers and nurse practitioners taking a doctor's role. Especially if there are any shortages at the higher level workforce. You can see that the owners of the software or tools would likely profit greatly (pointing to cost huge savings), and that without the software or high level tools, the individual would not be able to complete the tasks.

While working in this role, it would be wise to realize what you actually know. Hopefully everyone isn't forced into having to keep up with technology across the board. In true tech like software and EE - 20% of what you know is obsolete every year - if you can't keep up, in 5 years you know very little. Granted, many have found a safe little niche, but we all can't be like Norm in "Office Space".  

In reply to by Oldwood

Oldwood poor fella Fri, 03/09/2018 - 11:17 Permalink

Human's only real asset is our brain....if we choose to use it. And what is great about that is the more we use it the more powerful it becomes. While technology may make our specific knowledge and skills obsolete every few years, the knowledge and skill is the foundation to the next technology. Starting from zero is much tougher than simply amending and adding to our knowledge and skills, plus the simple continual exercise of our brains makes learning far easier.

There is always an excuse to retreat from the front lines of the battle. We simply must be smart, knowing where risk is necessary and where it is only loss. People abandoning education because they see their task too great, have simply surrendered. And government makes it easy to do so...especially for those "groups" highlighted as special needs. It's like we are deliberately enabling failure....the failure to compete.

In reply to by poor fella

Oldwood ejmoosa Fri, 03/09/2018 - 10:33 Permalink

And we have all been following these statistics and what has it yielded?

Come to Dallas and tell us how crappy the economy is. There are some real stink-holes out there bringing the averages down. Any real economic growth will have to bring them along kicking and screaming trying to preserve their progressive ideology.

A rising tide will raise most ships, except those with holes in their bottom keeping them beached. I will not say that the statistics are wrong, but I will say they are not necessarily representative of OUR actual circumstances. I can understand completely how someone in Baltimore would see your statistics completely true, but not Dallas and many other areas around the nation. We are most definitely seeing wage pressures created by shortages of help.

I think you could look at the stock market in a similar light, while it may go up overall, many stock owners have seen little growth, and conversely, the market going down is not indicative of ALL stocks. 

Maybe we can all review climate change statistics and graphs and comment on their validity or relevance.

In reply to by ejmoosa

Oldwood gatorengineer Fri, 03/09/2018 - 10:11 Permalink

We simultaneously hate big interventionist government, the manipulation that is supposed to enhance economic growth, but creates massive collateral damage and corruption, and freak the fuck out if anyone dares to change it. Government should not be incentivizing home purchase or construction unless it is achieved by getting the fuck out. The fact that state and federal government has twisted our markets into a knot trying to squeeze blood out of us while PRETENDING it is actually coming from someone else's pocket is simply madness.

Trump's tax bill is going to cost me bigly by capping my home ownership relative deductions, but I don't care as long as it results in real economic growth and a departure from destructive government interventions that make madness and chaos the only reality of our world.

We should recognize that the ONLY way in which we even try to fix this mess involves some personal pain. This is no different that drug addiction. We all recognize that our current economy is built on nothing but debt and delusion.

we have three choices, we either continue on this path we largely believe will ultimately lead to wide spread disaster. We can basically coup our entire government, go cold turkey and live through hell, or we can attempt to slowly ween off this dope, endure pain and discomfort, much of it feeling entirely unfair and unjust, and try to return to a sustainable normalcy.

We got here by making decisions of short term gain and pain avoidance. There will be a reconciliation and we must simply choose how that happens.

In reply to by gatorengineer

NumberNone loveyajimbo Fri, 03/09/2018 - 09:57 Permalink

Instead of wishing that Trump succeed so that the entire country wins, the MSM and government bureaucracy constantly hope for failure.  It stains everything they do  

During the recent stock market dip the press was literally running a countdown of the drop needed to give back the Trump gains. They couldn’t wait to see it all collapse so they could say ‘told you so’. 

In reply to by loveyajimbo

spiral galaxy Hal n back Fri, 03/09/2018 - 09:10 Permalink

Autos - now last forever and there's only so much channel stuffing.  Ditto for backlash on sales and property etc. taxes and heightened awareness of depreciation curve.  Heck, wait two years and get yourself a new car for half the price!

Housing - skilled labor shortage for construction, plus pushback on ever increasing state & local taxes .......then there's the mobility issue and rentals.

Restaurant - proliferation of restaurants, especially quasi fast food types, has cut into legacy restaurants.  Then there's the pushback on 'mandatory' tip fee of some 18-22 percent for 'large' (4 and above) tables, with the hated 10+ percent food tax.   So a big FU to restaurants.

But if you're hypnotized by years of watching CNBC, then yes, everything sucks and it's Trump's fault.  ......but buy the dip and tech is great!

In reply to by Hal n back

Oldwood spiral galaxy Fri, 03/09/2018 - 09:43 Permalink

While I'm not going to knock anecdotal evidence as it is very real to the individual and circumstance, it is still not necessarily an accurate representation of facts in the larger aggregate.

Come to a place like Dallas and stand back in wonderment at the scale of growth. For someone living is say Baltimore, this is nothing but a lie if not personally experienced.

Our reality is local....but not in aggregate or macro. We know that areas dominated by progressive policies focused on redistribution rather than growth or prosperity will only improve by a rising tide created by other forces....forces that are in direct contradiction to their economic reality.

And while we cannot simply conjure away our debt and headwinds, their can be no doubt that regardless of our economic realities, there will be no growth or prosperity for most of us if we remain in closed circles of nattering neybobs of negativity. 

How far do we really expect to advance if all we hear, do and say is directed by whispers and creams of "the end is near"? We can't ignore our facts but we can't be consumed by them either. Remember....on a long enough timeline NONE survive, so lets give it a fucking CHANCE!

In reply to by spiral galaxy

Oldwood vaporland Fri, 03/09/2018 - 09:48 Permalink

There is no power to make us extinct beyond our own choices and behaviors. Progressives understand this which is WHY they work so hard to undermine or morals and ethics, constantly reminding us of our failings or simply making shit up.

Their goal is NOT to defeat us in competition or even debate on theory, but to convince us that we are somehow unworthy of that which we have attained, and to surrender peacefully, or at the very least, lie silent while they continue onward towards their beloved (and impossible) Utopia.

In reply to by vaporland

dirty fingernails Ajax-1 Fri, 03/09/2018 - 11:04 Permalink

Coming from a rabid supporter of the party that openly calls for eliminating minimum wages because "it forces people to work for more than they might want". Because nobody ever said that they wish they could make less money.  Damn, everybody wishes they could be poor, but they're forced to make $14,000/yr before taxes and try to survive on that.

In reply to by Ajax-1

NoPension Fri, 03/09/2018 - 08:38 Permalink

Good grief !!

Every business owner I know is complaining about a lack of talented workers.

I'm so busy I can't see straight. Just finished a big project...so I'm dicking around, drinking coffee...waiting for the bank to open.

Let it Go Fri, 03/09/2018 - 08:42 Permalink

Today has come to be known as "Job Friday." This is the day when the BLS releases its latest jobs report that is watched closely by economists and investors. The report suggests whether the American economy is on track and its future path. This should also be a reminder that Americans don't just want jobs, they want "good jobs." More on this subject in the article below.

 http://Job Friday Is A Reminder It Is Good Jobs We Want.html