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Employment Situation  
Released On 3/6/2009 8:30:00 AM For Feb, 2009
PriorConsensusConsensus RangeActual
Nonfarm Payrolls - M/M change-598,000 -648,000 -800,000  to -500,000 -651,000 
Unemployment Rate - Level7.6 %7.9 %7.8 % to 8.1 %8.1 %
Average Hourly Earnings - M/M change0.3 %0.2 %0.0 % to 0.3 %0.2 %
Av Workweek - All Employees33.3 hrs33.3 hrs33.1 hrs to 33.5 hrs33.3 hrs

The employment situation for February was ugly but to see how bad it was you had to get past the first headlines. Nonfarm payroll employment in February plunged 651,000, following a decline of 655,000 in January and a fall of 681,000 in December. The latest number was right in line with the consensus forecast for a 648,000 decrease. But the bad news can really be seen with the downward revisions to the prior two months. January was revised down 57 thousand and December was bumped down 104 thousand for down a net 161,000.

From the household survey, the civilian unemployment rate surged further to 8.1 percent from 7.6 percent in January. The February rate was higher than the market projection for 7.9 percent and is at its highest in 25 years.

Turning back to the payroll survey, job cuts in February were widespread. The latest decline was led by the service-providing sector which shed 375,000 jobs. In this sector, the largest job losses were seen in professional & business services, down 180,000, and in trade & transportation, down 124,000.

The goods-producing sector also continued its downtrend, falling 276,000. Manufacturing and construction declined by 168,000 and 104,000, respectively. Natural resources & mining decreased 4,000.

On a year-on-year basis, nonfarm payroll employment growth fell to down 3.0 percent in February from down 2.7 percent the month before.

Looking at wage inflation, average hourly earnings rose 0.2 percent in February, matching January's gain. The consensus had forecast a 0.2 percent gain. The average workweek was steady at 33.3 hours.

Today's employment report shows a very bleak labor sector and points to further retrenchment in personal income and consumer spending. The dollar weakened against all major currencies. There is likely to be negative impact on equities-look for flight to quality in bonds.

Consensus Outlook
Nonfarm payroll employment in January showed the economy worsening further with a third consecutive drop in payroll employment topping half a million. Nonfarm payroll employment in January plummeted 598,000, following a fall of 577,000 in December and a decline of 597,000 in November. The latest wage inflation numbers have been a little peculiar in recent months. Average hourly earnings increased 0.3 percent in January after rising 0.4 percent in December. It is likely that average hourly earnings have been kept on the high side by a shift in the composition of those still with jobs with more low-paying jobs being cut than high-paying jobs. The civilian unemployment rate jumped to 7.6 percent from 7.2 percent in December. The January number is the highest since 7.6 percent for October 1992. Looking ahead, jobless claims have been rising and are pointing to a February job loss that is even larger than January's.

The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.

Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.

The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.  Why Investors Care
During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.
Data Source: Haver Analytics
The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.
Data Source: Haver Analytics

2009 Release Schedule
Released On: 1/92/63/64/35/86/57/28/79/410/211/612/4
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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