Friday, March 4, 2011

USA Unemployment Rate Drops to 8.9% (Charts) *Jobs growth +192K in February*


Bureau of Labor Statistics: Monthly Employment Situation Summary

USA Unemployment Rate Decreased to 8.9% in February

Official Statement by the U.S. Bureau of Labor Statistics Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics re- ported today. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing.

*** Please note the unemployment rate is calculated by a household survey and the jobs data (increase or decrease) is calculated by an employer survey. The household survey includes self-employed and farm workers, the employer survey does not include these. Overall, the jobs data (employer survey) indicates insufficient jobs growth to decrease the unemployment rate (household survey). ***

Unemployment Rate (Chart) The unemployment rate (U-3) decreased to 8.9% (preliminary) in February and is the lowest since April 2009 (8.9%). The Great Recession peak was in October 2009 at 10.1%. The chart below shows the latest 17 months of the monthly unemployment rate (U-3).

Total Nonfarm Employment Monthly Net Change (Chart) Total nonfarm employment increased +192,000 (preliminary) in February. The total  nonfarm  employment job losses peaked during the Great Recession at -820,000 in January 2009. The best jobs gain subsequently has been +458,000 in May 2010. The net jobs gain in total nonfarm employment for 2010 was +940,000, compared to net job losses of -5,063,000 and -3,600,000 in 2009 and 2008, respectively. There was a net jobs gain of +902,000 in 2007, before the Great Recession. Although the February gain in jobs is positive data, the 2010 and beginning of 2011 net gain in jobs is overshadowed by the net job losses in 2008 and 2009. The chart below shows the latest 38 months of monthly changes in total nonfarm employment. Total nonfarm employment is private sector plus government sector jobs.

Commentary The February decrease in the Unemployment Rate (U-3) to 8.9% and the monthly increase (+192,000) in Total Nonfarm Employment is welcome news. There are both good and bad aspects to this February data.

Postive "We have moved into the expansion phase of the economic cycle and the economy is self-sustaining," said Brian Levitt, an economist at OppenheimerFunds in New York. "The numbers confirm that labor market conditions are gradually improving. It is critical that the pace of improvement accelerate over the course of the year given the overall size of the unemployment problem," said Mohamed El-Erian, co-chief investment officer of PIMCO in Newport Beach, Calif.

Negative Jeff Cox, "Why the Unemployment Rate Has Become a Bad Joke", states, "At the heart of the unemployment rate deception are the nearly three million Americans counted as “marginally attached” to the labor force. Those folks would take a job if offered but actually aren’t actively looking and thus not counted in the government’s official statistics. There are a million more of them than there were in January 2008, thanks to the lousy job market that seems to be improving only at the margins."

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