February Employment: Slightly Better

According to today's report from the BLS, the unemployment rate ticked down to 8.9% (from 9.0%) in February, and payrolls increased by 192,000.

Those are both solid improvements, though I had been hoping for better in light of other very positive recent data like the ISM index.

The labor force participation rate was unchanged at 64.2, so at least the decline in the unemployment rate was not driven by people leaving the labor force (to be counted as unemployed, a person must report that they are looking for work).  That is in contrast to the big decline in the unemployment rate in December and January, where declining participation was a major factor.

If the recovery gets stronger, the participation rate should be expected to start rising.

The unemployment rate and labor force participation rate are calculated from a survey of households, which reported an increase of 250,000 in the number of people employed (the payroll number cited above comes from the survey of businesses, which has a larger sample).  February is one of the months where the seasonal adjustment to the unemployment rate is downwards; on a non-seasonally adjusted basis, the unemployment rate was 9.5% (down from 9.8% in January).

The BLS also revised upward the payroll employment increase estimates for December, to 152,000 (from 121,000) and January, to 63,000 (from 36,000).  It may be that some of the February increase really occurred in January, but wasn't properly counted due to the weather in January - a rough way to correct for this is to look at the average of the two months, which is an unimpressive 127,500 (that's roughly the pace needed to keep the unemployment rate stable as the population grows).

Worth noting amid the sturm-und-drang over state budget cuts:

Employment in both state and local government edged down over the month. Local government has lost 377,000 jobs since its peak in September 2008.

U-6, the BLS' broadest measure of unemployment and underemployment, which includes people who are "marginally attached" to the labor force and those who are working part-time but want to work full-time stands at 15.9% (seasonally adjusted), down from 16.1% in January.

Update: More reactions/analysis from Mark Thoma, Paul Krugman, David Leonhardt, Floyd Norris, Calculated Risk, Free Exchange, Gavyn Davies and RTE's round up of Wall Street commentary.