Last Week’s Economic News In Review
March 09, 2016
The economy added more jobs than expected, while lay-offs grew slightly, and construction spending enjoyed a healthy gain.
The unemployment rate held steady at 4.9 percent in February, with the economy adding 242,000 non-farm jobs, which was well beyond market expectation of 180,00 jobs, according to last week’s report from the Bureau of Labor Statistics. Key industries that were drivers for last month’s job growth included healthcare and social assistance, retail, food services and drinking places, and private educational services.
While jobs were up, wages declined. Average hourly earnings for all employees notched down 3 cents to $25.35, in February following an increase of 12 cents in January.
“Today’s jobs report revealed strong gains for the U.S. workforce, but more importantly, the data shows there’s room for this labor market to grow,” Tara Sinclair, chief economist for job site Indeed, told Forbes. “Employers added a robust 242,000 jobs, but with essentially zero wage gains amid strong demand. In this environment, there’s definitely potential to bring more people off the sidelines if wages increase more.”
Looking at long-term unemployment, Americans who have remained jobless for 27 weeks or longer remained essentially unchanged at 2.2 million in February. These individuals accounted for 27.7 percent of the unemployed population. The labor force participation rate — the number of employable individuals either with work or actively looking for work — increased slightly to 62.9 percent.
Initial Jobless Claims
In related news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending Feb. 27, notched up to 278,000, which was an increase of 6,000 claims from the prior week’s unrevised level of 272,000, the Employment and Training Administration reported last week.
While the increase ran counter to market expectations of initial jobless claims falling by 2,000 to 270,000 claims, the total was still well below the 300,000-claim mark that economists consider representative of a growing job market.
“There will be some volatility but that’s normal,” Jim O’Sullivan, chief U.S. economist for High Frequency Economics, told Bloomberg. “Claims will more or less stay at low levels. The job market remains strong.”
The four-week moving average, which is considered to be a more stable measure of lay-off activity, ticked down to 270,250, a decline of 1,750 claims from the preceding week’s average of 272,000.
Meanwhile, construction spending grew by a healthy 1.5 percent in January to hit and annual rate of $1.14 trillion, the Census Bureau reported last week. Compared annually, January’s rate was 10.4 percent higher than January 2015’s pace of $1.03 trillion.
Private construction spending grew 0.5 percent to hit an adjusted annual rate of $831.4 billion, and residential construction in January stayed relatively even, hovering at an annual rate of $433.2 billion.
While the housing component saw no change, which was disappointing for a real estate market hungry for increased inventory, the overall report was still welcome news, because it was indicative of economic growth
“The very good construction report for January is further proof that concerns about recession in the U.S. are far overblown,” PNC Financial Deputy Chief Economist Gus Faucher told the New York Times.
This week we can expect:
- Monday — Consumer credit for January from the Federal Reserve.
- Wednesday — January wholesale inventories from the Census Bureau.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; the February budget from the Treasury Department.
- Friday — Import and export prices for February from the Census Bureau and the Bureau of Economic Analysis.