Briefing.com: Nonfarm Payrolls

Updated: 05-Mar-10 09:24 ET

February Nonfarm Payrolls

Updated: 05-Mar-10 09:24 ET

Highlights

Nonfarm payrolls fell by 36,000 in February after declining by 26,000 in January.
The consensus expected payrolls to decline by 68,000.
The unemployment rate held at 9.7% in February.
The consensus expected it to increase to 9.8%.

Key Factors

It seems forecasters, including us, overestimated the effects of the severe winter weather on the payrolls data. The consensus estimate included a decline of 100,000 in payrolls due to inclement weather. As the BLS stated in its press release, the estimate turned out to be bogus and weather conditions played almost no role in moving the payroll numbers.
Importantly, the unemployment rate did not hold at 9.7% due to statistical manipulations. Instead, the data provide evidence of an influx in job creation. The number of employed increased by 308,000 while the labor force rose by 342,000.
There is a strong caveat to the unemployment data. The increase in employment is not coming from full-time/high-wage positions. Employment growth was caused by workers taking part-time jobs because poor business conditions made it difficult to find full-time work. These new part-time hires topped the entire aggregate increase in employment, 312,000 to 308,000.

Big Picture

Weekly claims for unemployment have to drop below 400,000 before payrolls will stabilize.
Limited wage growth and declining payroll levels are a recipe for very poor consumer confidence and sluggish consumer spending.