The spike follows upward revisions for the previous two months, with the hospitality sector contributing most of the gains.
By Manuel Gutierrez, Consulting Economist to NKBA
Employment rebounded last month with strong improvement on several fronts. The private sector added 465,000 jobs, although federal, state and local governments reduced their employment, bringing the net gain to 379,000 shown in Figure 1.
Along with the February gains, the Bureau of Labor Statistics revised upwards employment figures for the previous two months. January added 117,000 jobs, bringing that month’s new total to the 166,000 shown in the chart.
The gains of the last two months suggest that the economy might be on a path to recovery, even though it could take several years to get back to the historically high employment last seen in February 2020. U.S. employment is still 9.5 million jobs below those levels.
Other employment indicators also moved favorably in February. The unemployment rate improved, albeit modestly, falling from 6.3% to 6.2%; hourly wages were up 5.1% from a year ago, and the labor participation rate remained unchanged in February at 61.4%.
The unemployment rate, shown in the left panel of Figure 2, has fallen steadily from the nearly 15% it reached last April. There has been significant improvement since then, even though the rate remains almost double what it was in February of last year.
By gender, the unemployment rates for males and females each fell in February, but the improvement was slightly better for females. It dipped 0.2% to 6.1% for women, while edging down 0.1% to 6.3% for men. Prior to the pandemic, female unemployment had been mostly lower than that of males, but the situation was reversed by the shutdown. It then changed back this year, as the pandemic’s impact began to abate. Overall, total employment today is 5.4% lower than a year ago, when the U.S. reached an historical high of 158.7 million workers. Employment among males is 5% lower today than it was back then, with females down by a more severe 5.7%.
February job gains were concentrated in a single industry — Hospitality —with 322,000 added. Other areas with notable gains were in Professional & Business Services, +63,000; Retail, +41,000, and Entertainment, +33,000.
These gains, seen in the left panel of Figure 3, were pulled down by losses in other areas, as shown in the right panel.
Leading in job losses was the Government sector, cutting 86,000 jobs in February from January. In a K&B-related sector, 61,000 jobs were lost in the Construction industry.
It should be noted that losses in Construction were in the Non-Residential sector, where employment shrunk by 66,300 jobs. Residential Building actually added 5,300 jobs for the month.
Of interest is that construction of Residential Buildings is the only sector tracking above year-ago figures in February. It’s up by 2.2%.
Figure 4 shows the percentage gap from a year ago for most sectors. Hospitality and Entertainment continue to display the largest gaps from February 2020.
Mining, with the next largest shortfall compared to February 2020, reflects an added factor: the current government policy to shut most coal mining businesses, as well as reduce oil and gas extraction.