February Employment Report: More “Green Shoots”

Morris Segall      Employment "green shoots", employment report, February employment report, positive employment trends, turning the corner on unemployment, unemployment

The monthly employment report for February showed more “green shoots” of positive employment signs that we mentioned in our February 5th blog article on the “ January Employment Report”, and along with other recent empirical and anecdotal data, are leading us to believe we may be turning the corner on unemployment. We note the following positive data in the February report that builds on the encouraging trends we have noted since November:

1. The number of persons working part time for economic reasons declined again by 67,000 from January and has declined by 760,000 since October, 2010. This includes persons who are working part time due to business conditions and persons who could only find work part time. 

2. The number of persons unemployed for more than 15 weeks declined in February by over 300,000 from January, including a decline of over 200,000 in those unemployed 27 weeks and longer. Since November, the numbers of such unemployed have declined by over 670,000 and 330,000, respectively.

3. Total private sector payrolls increased in February by over 220,000, well above the monthly average of approximately 100,000 gains of the past year, and included widespread and significant gains in most goods producing and service industries.  Manufacturing employment has grown for four months and construction employment has shown a gain after more than a year of decline. In the important Professional and Business Services segment, employment is picking up in key sectors aside from temporary workers which have fueled virtually all of the gains in this sector. Management and Technical Consulting employment has increased by 25,000 since October and Administrative and Support Services has grown by over 150,000 jobs since October. In addition, architecural services as measured by the Architectural Billings Index has moved from retrenchment to expansion with readings of 50 and above since November, 2010. This is the most encouraging growth in these sectors since the recession.

4. As we forecast in our previous blog article of January 9th and our website article of December 6, 2010, previous months employment have been revised upward, including November and December, 2010 by 22,000 and 49,000, respectively, and January, 2011 by 27,000.

5. There are other positive indications such as an increase in the average workweek and manufacturing overtime and increases in job recruitment in financial and accounting, IT and new business development positions and an increase in marketing and advertising spending by businesses. In addition, an increasing number of industries, 68%, were hiring in February versus 60% in January and 58.6% in December, 2010. Lastly, the number of first time unemployment claims for the week ended February 26 fell to 368,000, the lowest level since May, 2008 and importantly, below the key 400,000 for the first time since the recession. This is a very bullish employment development.

These positive trends and developments are lending credence to the improved 9% employment rate attained since November and augur well for further employment gains as the economy continues to improve as we expect (See our website article, “Great Expectations-2011″, January 6, 2011).

Morris R. Segall, CFA, CIC