What US Jobs Data Tell Us About the Labor Market

(Bloomberg) -- The US labor market continued to surprise with another month of robust job creation in February. But under the surface, the details were a bit more mixed.

The good news is that more people joined the workforce, including women and minorities, and wage growth for many workers actually accelerated. On the other hand, job gains were concentrated in just a few industries and the number of hours worked on average declined.

Here’s a breakdown of the pros and cons from the Labor Department’s latest employment report:

The Good

• Payrolls grew by 311,000 last month, exceeding all but one estimate in a Bloomberg survey of economists. It marked the 11th straight month that job growth has exceeded expectations, extending the longest streak in data compiled by Bloomberg back to 1998
• The labor-force participation rate — the share of the population that is working or looking for work — rose to 62.5%, the highest since March 2020. The rates also rose for workers ages 25 to 54, women and minorities

• The employment-to-population ratio for prime-age workers — the share of those ages 25 to 54 who are employed — rebounded to pre-pandemic levels. That compliments the good news from the increase in the participation rate because it shows these people are not just in the labor force, but they have a job
• Wages for production and nonsupervisory workers — which make up the majority of US employees and aren’t in management positions — advanced 0.5%, the biggest gain in three months and primarily driven by service industries
• The median duration of unemployment fell to 8.3 weeks — the lowest since July, suggesting those out of work are getting a job more quickly. The average measure fell to the lowest since July 2020
• Construction employment — which often provides an early sign of economic trouble to come when it slows down — kept powering ahead. The industry added 24,000 jobs in February, even amid a slump in the housing market
• Employees working temporary jobs increased for a second straight month after sharp back-to-back declines at the end of last year. The category is seen as a leading indicator of labor demand

The Bad

• Average hourly earnings, which includes supervisors, climbed 0.2% from a month earlier — below forecast and the smallest advance in a year
• The average workweek was shorter at 34.5 hours in February. That’s a potentially worrisome sign as employers tend to cut hours before staff when demand wanes
• The so-called diffusion index, which tracks how widespread the employment gains are across industries, fell to the lowest level since April 2020. The report showed that most of the overall payrolls advance was due to hiring in leisure and hospitality, retail trade and health care
• Taken together, an aggregate measure of weekly payrolls — which provides a broader reading of changes in earnings, hours and employment — posted the smallest advance since a decline two years ago
• The number of job losers and those completing temporary jobs surged by 223,000 in February, the most since the early months of the pandemic

--With assistance from Reade Pickert, Katia Dmitrieva and Alex Tanzi.

(Adds increase in temporary jobs. A previous version corrected historical reference for aggregate weekly payrolls)

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