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The February jobs report was impressive on the surface (+275K), but nothing to get excited about. Most of the recent strength in jobs comes from government hiring, which is the least likely to boost the economy's growth potential. Private sector jobs growth—the main source of the economy's vitality—has decelerated significantly over the past two years, and is now growing at a modest 1.6% per year. At best, this suggests the economy remains on a 2+% growth path.
Chart #1
Chart #1 compares the growth of private and public sector jobs. Public sector jobs have grown by a robust 2.8% over the past year, while private sector jobs are up only 1.6% in the past year. The best that can be said of public sector jobs growth is that it has been very modest on balance since 2008.
Chart #2
Chart #2 shows the year over year growth of private sector jobs. They were going gangbusters two years ago (up almost 6%), but for the past few months have eked out only 1.6% growth, which works out to monthly gains of about 180K per month. Very ho-hum.
Chart #3
As for the unemployment rate, it's quite low, and that's good. But it's no longer falling and could be on the verge of rising. This bears watching, since rising unemployment from very low levels is a classic sign of impending recession.
2 comments:
My different view
275,000 new jobs claimed
(two revisions will follow in next two months)
January 2024 was revised 124,000 lower, the biggest negative revision in two years.
There has been a Biden pattern of revised sharply lower data the next month, for many economic datasets
Unemployment rate increased to 3.9%, up from a cyclical low of 3.4% in April 2023
The growing unprecedented divergence between the Establishment (number of payroll jobs) survey and more accurate Household (number of people employment) survey.
A person with two jobs is reported as employed by the Household Survey, while the Payroll Survey counts two jobs.
Also, the self-employed and farmers are only counted in the Household Survey (about 20% of US workers not included in the Payroll Survey).
In February 2024 the BLS Payroll Survey claimed 275K jobs were added, but the Household survey found that the number of people actually employed dropped for the third straight month (and in 4 in the past 5 months), this time by 184K
While the Payrolls series hit new all time highs every month since December 2020, the level of Household Employment has not budged in the past year.
BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs.
In February 2023 the US had 133.2 million full-time jobs, or more than it does one year later!
All the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million). All the new jobs have been art-time jobs!
Looking at the household data, there were only 600,000 jobs created in the past year. There were about 600,000 government jobs created in the past year. This is not a good sign.
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