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February Jobs Data Surprises To The Upside (Just Like We Said It Would); Unemployment Rises (That’s A Good Thing)
The U.S. economy added a net gain of 175,000 jobs in February, surprising most economists who were revising their estimates down this week based on a bunch of negative but apparently irrelevant economic reports. The consensus estimate from Bloomberg heading into this morning’s BLS report was a gain of 149,000, but the so-called ‘whisper’ number was quite a bit lower due to, among others, a worse-than-expected ADP report that came out mid-week. Fortunately for the economy and the labor market, the pessimists were overly sour as the actual data came in better than expected.
While the net gain of 175,000 was somewhat less than our 220,000 forecast, we definitely got the general sentiment correct that the numbers would be better than expected. I’d also add that there will be revisions in 30 days and again in 60 days, so we’ll see where the final numbers end up. My guess is that by the 60-day mark, the February number will be north of 200,000.
Of note as well, while I’m skeptical more often than not of citing weather as a factor, it’s hard to argue that it didn’t impact the numbers last month to some degree. There were simply too many storms, too much snow and ice, and too much cold everywhere in the country for it not to have negatively influenced the jobs market. It’s impossible to determine exactly how much, but the numbers certainly would have been higher were it not for the polar vortex. With that in mind, combined with the positive data we saw in the LinkUp index in February, our bullish call for March remains very much intact.
And lastly, today’s Employment Situation Report indicated that the unemployment rate rose last month, perhaps the best sign yet that the labor market might finally be moving into a higher gear. With improvements in people’s prospects for finding work, those people who had given up looking for a job are finally starting to look again. That group of people, what the BLS calls ‘Discouraged’ workers and those ‘Marginally Attached’ to the workforce, fell in February, driving up the number of unemployed people in the denominator of the unemployment rate calculation. As a result, unemployment rose slightly last month but again, that’s a good sign that more people are starting to look for work again as the job market slowly but steadily improves.