February Employment

A mildly encouraging employment report from the BLS today: in February, payrolls increased by 175,000.  The unemployment rate ticked up to 6.7% (from 6.6%), but that was partly due to a slight increase in labor force participation. 

The payroll number comes from a survey of firms and the unemployment rate from a survey of households (which has a smaller sample size); in the household survey, the number of employed people only grew by 40,000, while the labor force grew by 264,000.  Since the surveys are separate, they do not match up every month - last month the number of people reporting they were employed in the household survey was much stronger than the increase in payrolls.

The labor force includes everyone who is working, or looking for work.  In general, the decline in labor force participation (the percent of adults in the labor force) has been one of the more worrying trends of the last several years - in February, it stood at 63.0%, down from 66.3% seven years ago.  Since the unemployment rate is measured as a percentage of the labor force, to the extent that people are giving up on finding a job and leaving the labor force, the fall in the unemployment rate might make the labor market look better than it really is.  However, some decline might be expected due to demographic trends (i.e., retirement of the "baby boom" generation).  To try to set aside those effects, the employment-population ratio for 25-54 year olds can be useful:

This shows some recovery, but still a pretty deep hole relative to where we were before the recession.

'U-6', the broader measure of the unemployment rate which includes discouraged workers (i.e., people who are not looking for work but say they would like to have a job) and people working part-time but who would prefer to be full-time is at 12.6%, down from 14.3% a year ago.

10.5 million people are unemployed, and 3.8 million of them have been unemployed for longer than 27 weeks.

The data are all seasonally adjusted; on a non-seasonally adjusted basis the unemployment rate was 7.0% and payrolls increased by 750,000 (i.e., unemployment in February is normally high, so the seasonal adjustment is down, but payrolls normally grow, so the growth of payrolls is also adjusted down to remove the 'seasonal' effect).