After a blockbuster employment report to begin 2015, the Labor Department reported early Friday that the labor market corrected itself a bit in February. While job growth was robust last month, 295,000 added, and the unemployment rate dropped to 5.5 percent, wage growth was very slow and the labor participation rate fell slightly.
The 295,000 jobs added in February was a strong reading, well above the average of 272,000 new jobs added over the past 12 months. And it was an increase over the 257,000 jobs reported as added in January.
Job gains occurred in food services and drinking places, professional and business services, construction, health care, manufacturing, and in transportation and warehousing. Employment in mining and in the petroleum and coal products industry declined over the month driven by very low energy costs.
But for the first time in several months, the Labor Department adjusted prior months’ totals downward. January’s initial estimate was revised down to 239,000 jobs while December’s numbers were held steady at 329,000.
Even with the revisions, the 12 month period from March 2014 to February 2015 is the most robust period for job growth in more than a decade.
The official unemployment rate in February fell to 5.5 percent from 5.7 percent in January. But part of the decrease was due to people exiting the labor force in the month.
The American workforce grew by 703,000 in January, reversing a years-long trend of decline. The labor participation rate ticked up to 62.9 percent after steady declines; this moved the headline unemployment rate up to 5.7 percent for the month, an unexpected increase at the time. In February, the labor force participation rate edged down to 62.8 percent as more people exited the workforce than entered it.
The extreme weather in the eastern half of the nation in February could partially explain a lack of participation, as record cold gripped the East Coast and upper Midwest. Record snow also hit New England and the northern East Coast. March’s labor participation numbers should be very telling.
Another sore spot in the February labor report was the tepid rise in wages. Over the month, wages grew just 3 cents, or 0.1 percent, well below the 12 month pace of 2 percent. Wages in January shot up 12 cents, bringing the previous 12 month reading to 2.2 percent.