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Jobless Rate Falls To 3.8%

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Today’s Employment Situation results from the U.S. Bureau of Labor Statistics for February were released ahead of today’s opening bell, with results well below the expected 180K new jobs created for the month: 20K new jobs is the lowest tally since September of 2017, and far below the upwardly revised 311K in January. The Unemployment Rate sank to 3.8% from the previous 4.0%.

Average Hourly Earnings rose 11 cents on average to $27.66 per hour, +0.4% sequentially. Year over year, we see +3.4% earnings growth, the largest upswing since April of 2009. We also saw an upward revision to December’s job totals, from 222K to 227K, bringing the 3-month average to 186K — voila! right in-line with monthly expectations.

The sectors taking the biggest hits last month were Construction, down 31K, and Leisure/Hospitality at 0 (down from +89K the previous month). While the Leisure/Hospitality figure aligns with Wednesday’s ADP (ADP - Free Report)  private-sector figure, Construction was strong in that report. This discrepancy will likely be revised on one end or the other — perhaps the government shutdown or major weather-related impediments in February will reveal a more conclusive number.

Labor Force Participation rose to 63.2%, a healthy number relative to past results, and certainly pointed in the right direction, especially with the Unemployment Rate coming down. The U-6 read (aka “real unemployment,” posted the widest month-over-month drop in recorded history: from 8.1% in January to 7.3% in February.

In short, despite the very disappointing headline figure, there is plenty to like when poking through the details. A rebound in Construction and Leisure/Hospitality would go a long way toward keeping this long-term healthy labor market apace with a still-strong economy.

In other news, Housing Starts for January rose admirably to 18.6% from the 9.5% estimate, or 1.230 million new units. Building Permits, a forward indicator of future Starts, rose 1.4% to 1.345 million. We’re still a bit behind on these figures due to the government shutdown, but seasonal weather-related issues does not seem to have negatively affected the January homebuilding space.

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