Jobs Numbers Up, Employers Hiring

March 10, 2006 — -- This morning's report on new jobs shows that the nation's employers are hiring at a pace that will likely support healthy growth in the nation's economy.

The Bureau of Labor Statistics says that in February, 243,000 workers were added to payrolls, outdistancing most economists' expectations of 200,000 new jobs. With slight revisions to previous months (December +5,000 and January -23,000), the net job addition for the month was 225,000.

The nation's unemployment rate ticked up by a tenth of a percent to 4.8 percent. It's important to note that the unemployment number is a one-month move that is within the two-tenths of a percent margin of error.

The jobs report also reveals some interesting statistics about hurricane evacuees. According to labor statistics' data, only about one-half of the 1 million evacuees (age 16+) have returned to their original homes. The unemployment rate for Katrina/Rita evacuees is 12.6 percent, more than 2½ times the national unemployment rates. If you haven't moved home, you're much more likely to be unemployed. Those who have not returned to their August 2005 residences have a 22.6-percent unemployment rate.

Today's report is bullish by pretty much any measure, and the economy is ticking along. Most economists will use today's numbers to support their belief that the fourth quarter of 2005 was a hurricane-related blip on the nation's economic radar screen.

The Federal Reserve System has suggested that it will be more reliant on data (like the jobs report) when making decisions on interest rate hikes in the coming months. The healthy jobs growth and wage growth revealed today makes it more likely we'll see a rate hike during the Fed meeting on March 28. The central bank hikes rates when inflation pressures (like wages) perk up.

Most industry sectors are showing up-arrows this month, but there are some standouts.

Specialty trade contractors -- the folks who plumb houses, wire office buildings, and install windows on new stores -- got jobs in February; 31,600 of them found work during the month. That growth didn't hurt retailers who sell building and garden supplies. They added about 8,600 clerks and stockers to their ranks in February.

The finance and insurance industry grew by 16,200 workers during the month, as did education and health services (+47,000) and the restaurant/bar sector (+20,800).

The folks who build transportation equipment (-10,600) and electrical appliances (-9,300) got pink slips last month.

So how much does this matter? It's important. The jobs report is arguably one of the best economic indicators out there -- and it's easy to understand.

Definition: The nonfarm payrolls number is a measure of the number of new jobs created by the private sector during the month. It is based on a survey of about 160,000 businesses and government agencies. The national unemployment rate comes from a separate survey of households.