Shake Hands

There was a U.S. hiring rebound in February, but wage growth slowed amid mixed economic signals
Originally posted by Dan McSwain | March 4, 2016

Hiring was brisk in February around the nation, with nonfarm employment increasing by a seasonally adjusted 242,000 jobs as more people moved into the workforce, leaving the unemployment rate unchanged from January at 4.9 percent, the Bureau of Labor Statistics reported Friday.

Federal statisticians also revised their combined January and December figures upward by about 30,000 jobs, suggesting that the U.S. economy’s winter rough patch was milder than many analysts believed.

Yet the data wasn’t unequivocally bright: Wages were essentially flat in February after growing by 0.4 percent in January, leaving a 2.2 percent average gain in hourly earnings over the year.

 “While the headline numbers in the report are important, many Americans are most eager for better pay gains,” said Mark Hamrick, senior economic analyst at financial information website “On that front, the February data represents a setback.”
 In San Diego County, employers cut 19,900 more jobs than they created in January (the most recent month measured), with reductions concentrated among industries that hire workers for the holiday season, state officials reported.

Still, even more people left the workforce, so the unemployment rate fell a notch to 4.7 percent in January from a revised 4.8 percent in December, said officials with the California Employment Development Department.

The local job reductions owed mostly to seasonal factors. For example, 8,900 jobs (5.7 percent) disappeared from the retail sector.

After adjusting for seasonal volatility, the region added 2,900 jobs over the month and 38,000 over the year, said Lynn Reaser, chief economist of the Fermanian Business and Economic Institute at Point Loma Nazarene University.

“While it is still early in the year, the region appears to be surviving global and market turbulence,” Reaser said in an email. “Further job gains and lower unemployment can thus be expected in coming months.”

A look at the unadjusted numbers from December to January shows the volatility Reaser was talking about: San Diego employers reduced jobs in construction (-2.2 percent), financial activities (-1.5 percent) and education and health services (-1.4 percent).

Gains were reported in manufacturing (0.3 percent), wholesale trade (1.1 percent) and scientific research and development services (0.6 percent).

Throughout California, the seasonally adjusted unemployment rate declined to 5.7 percent in January from 5.9 percent in December.

Educational and health services showed the largest increase, adding 9,500 jobs, while smaller gains came in manufacturing, construction and information sectors of the labor market.

California employers cut jobs in mining and logging over the month.

State officials also reported that new claims for unemployment insurance increased to 53,682 in January, up slightly from December’s figure and well above the 40,989 new claims in January 2015.

Getting back to the U.S. figures for February, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.2 million — a level that hasn’t budged since June. Federal officials said about 28 percent of the nation’s 7.8 million unemployed fell into the long-term category in February.

Also unchanged, at 6 million was the number of “underemployed;” people working part-time who’d rather have full-time jobs.

The February jobs report is the last significant batch of economic data before Federal Reserve policymakers meet this month to determine whether to enact another small hike in a key interest rate.

Economic theory holds that tightening labor supply will cause wages to rise and fuel general price inflation, whereupon central banks typically raise rates and restrict the supply of money to slow inflation. However, other factors like sluggish U.S. manufacturing and slowing global trade have prompted the Fed to maintain historically low rates.

“Continued months of strong job growth should eventually translate into durable accelerations in wage growth, but it hasn’t happened yet,” said Josh Bivens, research and policy director at the Economic Policy Institute think tank. “Given this, job creation and economic expansion should continue to be encouraged, not tamped down with another interest rate hike from the Federal Reserve at their next meeting.”

Other economists, such as former Treasury official David Malpass, have argued for the opposite course of action. The central bank’s decision to hold rates near zero since 2008 has artificially restricted business investment and wage gains, so substantial growth will require “normalization” of monetary policy, they say.

Jim Puzzanghera of the California News Group contributed to this report.

This article was original posted by the San Diego Union Tribune and can be found HERE.