According to the February Employment Situation Report from the Bureau of Labor Statistics, nominal average hourly earnings rose by 3.4 percent over the past 12 months—the fastest nominal hourly wage growth since 2009, and the 7th straight month that year-over-year wage gains were at or above 3 percent. Prior to 2018, nominal average hourly wage gains had not reached 3 percent since April 2009.
Real wages (taking inflation into account) are also growing. Based on the most recent Personal Consumption Expenditures (PCE) price index data from December, inflation in the past year was 1.7 percent, and based on the most recent Consumer Price Index (CPI-U) price data from January, inflation in the past year was 1.5 percent (February inflation data is not yet available for either series).
Although the economy only added 20,000 jobs in February, falling short of market expectations, the average jobs growth in the past 12 months was a healthy 209,000 jobs and in the past 6 months averaged 190,000 jobs gained. Both the 12-month and 6-month averages remain above the 2017 annual average of 179,000 jobs per month. Both January and December’s employment numbers were also revised up by a combined 12,000 jobs (5,000 in December, and 7,000 in January). The economy has now added over 5.3 million jobs since the election, which includes 493,000 jobs in the Manufacturing industry alone.
The report also highlighted the historically low unemployment rate, which fell to 3.8 percent in February and is just above the nearly 50 year low of 3.7 percent that was reached in November. This marks the 12th consecutive month where the unemployment rate has been at or below 4 percent. In addition to the decline in the population-wide unemployment rate, the unemployment rate for Hispanics fell by 0.6 percentage points to 4.3 percent and achieved a new series low since beginning in 1973. The unemployment rate for Whites (3.3 percent) also matched the lowest rate since November 1969.
In addition to the unemployment rate, two key measures of labor market strength are the labor force participation rate, which tracks how many people are working or looking for work, and the employment-to-population ratio, which tracks the share of people who are working. The labor force participation rate matched its highest rate in over 5 years (since August 2013), remaining unchanged at 63.2 percent in February. The employment to population ratio also is the highest it has been since December 2008, remaining unchanged at 60.7.
Even though the payroll employment growth fell short of expectations, one month does not make a trend. Furthermore, the totality of this month’s jobs report—including the accelerating wage growth, falling unemployment rate, and continuation of the longest consecutive streak of jobs gains—reflects the continued growth and strength of the United States labor market.
