February 2017 Jobs Report

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Market Reporting that Matters

February 2017 Jobs Report

Another Strong Month of Job Gains

Monday, March 13, 2017

February’s job gains exceeded early estimates by a wide margin, almost matching last month’s surprisingly strong revised January figure. The initial estimate from the U.S. Bureau of Labor Statistics (BLS) indicated that total nonfarm payroll employment increased 

by 235,000 jobs, as the unemployment rate ticked down to 4.7%. February’s job gains were well above the consensus forecasts of
about 189,000 jobs.


Labor Force Participation Can Affect Housing Demand

Structural Shift in Labor
Market More Pronounced

December’s job-gain figure of 157,000 was revised down to 155,000, while January’s was revised up from 227,000 to 238,000 -- a net increase of 9,000 jobs during the previous two months. February’s monthly number was the second straight month above 200,000 jobs, starting 2017 on a high note. Job gains exceeded 200,000 in only five months during 2016, while 2015 had nine such months and 2014 had 10.

Annual job growth remained moderate, remaining at 1.6% for the fourth straight month, down from 1.8% in February 2016. Annual job gains were 2.350 million, some 254,000 less than February 2016’s total and 2,000 less than last month’s annual rate.

Average hourly earnings (wages) for privately-employed workers continued to provide good news, increasing to 2.8% on an annual basis in February, a slight increase from January’s 2.6%.


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The headline unemployment rate moved down again to 4.7% in February, according to the Current Population Survey. The civilian labor force participation rate increased by 10 basis points (bps) to 63.0%, as the number of unemployed people looking for work decreased while the number of employed increased. The employment-population ratio also increased by 10 bps, to 60.0%.

The number of part-time workers for economic reasons decreased by 136,000 from January, and down by 315,000 from February 2016. The U6 unemployment rate, which includes these part-timers and marginally attached workers, decreased 20 bps to 9.2%, down 50 bps from last year at this time.

The number of long-term unemployed (27 weeks or more) decreased by 49,000 from January and was 358,000 lower than February 2016. The number of multiple jobholders increased by 526,000 from February 2016 to 7.98 million, and the number of discouraged workers not in the workforce (522,000) decreased by 77,000 from one year ago.


Industry Focus

The not seasonally adjusted unemployment rate for the oil and gas extraction industry fell to 4.6% in February from 9.2% in February 2016. The rate increased in the Transportation & Utilities (+80 bps), Education & Health Services (+20 bps), Construction (+10 bps), Information (+20 bps) and Wholesale & Retail Trade (+10 bps) industries. Notable unemployment-rate decreases occurred in the Non-Durable Goods (-170 bps), Manufacturing (-70 bps), and Professional & Business Services (-30 bps) industries.

The Education & Health Services (+62,000) supersector dominated all industries in job gains for February, followed closely by Construction (+58,000). Three other industries gained at least 20,000 jobs: Professional & Business Services (+37,000), Manufacturing (+28,000) and Leisure & Hospitality (+26,000).


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  • Leisure & Hospitality’s net gain came primarily from 16,700 new jobs in the food services sector, while arts, entertainment and recreation added 5,700 jobs.
  • Mining & Logging continued its comeback, gaining 9,000 jobs in February, as support activities for mining returned 6,000 jobs to the economy.
  • The Other Services and Government industries each added 8,000 jobs in February. Personal and laundry services (+6,200) led for Other Services, while local government (+9,000) was the strongest subsector for Government.
  • The Financial Activities supersector’s gain of 7,000 jobs came entirely from the real estate subsector (+7,100).
  • Construction hiring was especially strong in the non-residential specialty trade contractors (+21,500), heavy and civil engineering construction (+15,100) and residential specialty trade contractors (+14,900) subsectors.
  • The Professional & Business Services supersector’s gains came from both the professional and technical services (+20,300) and the lower-paying administrative and waste services (+12,100) sectors.
  • Manufacturing’s robust gain was spread between the non-durable goods (+18,000) and durable goods (+10,000sectors. The machinery subsector added 6,800 to the durable goods total, while food manufacturing (+8,800) led the non-durable goods category.The Information industry was a net zero, as gains in the telecommunications (+1,900) and other information services (+1,400) subsectors were offset by losses in the broadcasting (-1,000), motion picture and sound recording (-900), and data processing, hosting, and related services (-700) subsectors.
  • The Education & Health Services supersector saw healthy gains in educational services (+29,300) and health care and social services (+32,500) – particularly in the ambulatory health care services subsector (+18,300).
  • The Trade, Transportation & Utilities supersector (-8,000) was the only industry to lose jobs in February. Gains in wholesale trade (+9,900) and transportation and warehousing (+8,800) could not offset sharp retail losses in the general merchandise stores (-19,300), electronics and appliance stores (‑8,200) and clothing stores (-5,500) subsectors.

The employment data for metropolitan areas for January 2016 will not be released by the BLS until March 13 as it conducts its annual benchmarking revisions at the state and metro level. Therefore, there is no employment by metro table included in this report.

Please contact us if you have any questions.

Jay Denton
Senior Vice President


KC Sanjay
Sr. Real Estate Economist


Chuck Ehmann
Real Estate Economist


Labor Force Participation Can Affect Housing Demand

The labor force participation rate hovered around 62.7% throughout 2016, the lowest it has been since the late 1970s. A recent report from the Federal Reserve Bank of Atlanta sheds light on the nuances and drivers of the declining participation rate, including the impact of earlier retirement ages, family requirements and time spent earning a college degree.


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Because employment is so strongly connected to housing market performance, the implications of a declining LFPR can have a chilling effect on housing demand – or at least potentially dampen the long-term outlook for both the single-family and apartment markets.

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From the early 1970s through the late 1990s, the participation rate increased by about 5.2% — primarily from women entering the workforce in large numbers. The participation rate fell only slightly in the first decade of the millennium before cratering during, and in the aftermath of, the Great Recession. According to estimates from the Congressional Budget Office, the participation rate is projected to fall even farther through 2020, ending the decade at a projected 62.0%, 70 basis points below where it is today.

Because the participation rate fell so sharply during and after the Great Recession, it is useful to break down the factors that caused the almost 3.4% decline over the last 10 years. Among the factors considered by the Atlanta FED, the largest contributor to the declining participation rate was an aging population: An older population consists of more retirees and thus a lower participation rate overall.

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The second largest contributor was an increase in time spent pursuing higher education: Both young and middle-aged cohorts are removing themselves from (or delaying entry into) the labor market to increase their skills and credentials in the hope of higher-quality (and higher-paying) employment.

Increases in the number of individuals with health problems and disabilities also is contributing to the declining participation rate, although the rate of increase in disability claims to the Social Security Administration’s disability program has slowed from almost 3.0 million in 2010 to 2.3 million in 2016. However, it is still well above the 2002 rate of 1.7 million.  Another factor in the declining participation rate is an increase in those who are part of the “shadow labor force” — individuals who would like a job but are not currently seeking work for one reason or another.

On the other hand, two factors have worked to boost the labor force participation rate (even if they couldn’t arrest the sharp decline over the last 10 years): retirement and family responsibilities. More and more senior citizens are delaying retirement and remaining in the labor force longer than their predecessors, boosting the participation rate. Finally, those who leave the labor force to care for children or other family members fell as a share of the population since 2007. In other words, the Great Recession pushed those who otherwise would have remained at home caring for family back into the labor force, thereby mitigating some of the decline in the participation rate.

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Looking at the reasons why Americans are not in the labor force by age helps illustrate two of the important drivers of the declining participation rate: trends in retirement and educational attainment.


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For one, the retired share of the population increased dramatically after the Great Recession — growing from 15.2% of the population in 2009 to 17.2% in 2016 as the oldest Baby Boomers hit retirement age in 2008. Despite the trend of potential retirees working longer into their retirement years, aging boomers and workers who “retired” after losing their jobs in the recession are the cause of the retired share of population growing so sharply in the aftermath of the Great Recession.



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In terms of educational attainment and its impact on the participation rate, the key demographic is those ages 16-24. Throughout the 1970s, this age group’s labor force participation rates grew substantially, reaching as high as 68.7% in 1979. Although the participation rate for this group declined somewhat until the turn of the 21st century, it was not until around 2001 when its participation rate fell substantially — continuing its downward trajectory through the Great Recession before stabilizing since 2010.

With the relative scarcity of quality employment beginning in the early 2000s, higher education has become more attractive to young adults, who see more credentials and skills as a key source of better employment. It follows, then, that the worst recession since the Great Depression would push more and more young adults into higher education and outside the labor market — at least temporarily. Another trend affecting the declining participation rate for 16-24-year-olds is the heavy emphasis on college education after high school. Fewer students are transitioning to trade schools or joining the labor force in the skilled trades.

Of the factors causing the decreasing participation rate, the most worrisome for the housing market is the lower rate for young people. The prime renter age group is 18-34, and if less of them are working, less of them will be in the market for apartments. As seen in the chart above, however, the participation rate for young people has flattened out, and there is hope that continuing recovery of the economy can entice young people out of their dorms or their parents’ basements and into the apartment market in the next few years.

Structural Shift in Labor Market More Pronounced

Economists and other market observers have noted that a shift or disconnect has occurred in the labor market over the past several years. Using the Beveridge Curve, we can see a decided shift in the trends over time of the ratio between the unemployment rate and the jobs-opening rate as reported by the Bureau of Labor Statistics (BLS).

The bottom trend line reflects the period before and including the Great Recession; the upper trend line is the period since. You can see that even during periods of pre-recession economic growth, the ratio trended up and down the same line. However, during the recovery and since, the ratio is trending at a level elevated from the past series.


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The Beveridge curve above comes from the monthly Job Openings and Labor Turnover Statistics (JOLTS) data from the U.S. Bureau of Labor Statistics. As explained by the BLS: "The graph plots the job openings rate against the unemployment rate. This graphical representation is known as the Beveridge Curve, named after the British economist William Henry Beveridge (1879-1963). The economy’s position on the downward sloping Beveridge Curve reflects the state of the business cycle. During an expansion, the unemployment rate is low and the job openings rate is high. Conversely, during a contraction, the unemployment rate is high and the job openings rate is low. The position of the curve is determined by the efficiency of the labor market. For example, a greater mismatch between available jobs and the unemployed in terms of skills or location would cause the curve to shift outward, up and toward the right."

As seen on the graph above, the U.S. economy moved down the curve to the right during the 2001-2003 recession, shown by the red line. This happened again during the Great Recession from December 2007-June 2009. When the economy was growing (2003-2007), the economy moved back up and to the left along roughly the same trajectory.

However, during the most recent recovery period (blue line from 2010 until now), the unemployment rate has been falling steadily, but the number of job openings has been rising at a faster rate. For example, the number of job openings during 2001 and now were similar, but the recorded unemployment rate was about 4% in 2001 vs. about 4.7% as of February 2017. The jobs opening rate is, on average, 70 basis points (bps) higher after the Great Recession to achieve the same unemployment rate as before the recession. What is causing this shift in the curve?

After a deep recession, it is not unusual to see a disconnect between the number of job openings and the unemployment rate because, at the tail end of a recession, employers are still reluctant to hire. Actual hiring doesn’t increase to a robust pace until they are confident that the recovery will be sustainable. That may explain the gap early on, but with monthly job gains averaging close to 200,000 recently, this gap is more likely caused by the mismatch of skills, mobility and experience required for the jobs that are available and what the currently unemployed have to offer.

Much has been written on the post-recession skills mismatch. Large numbers of skilled and unskilled laborers left the economy (or country) as work dried up, or they shifted to other industries. For example, many construction workers left for the oil and gas fields as the shale boom supplanted home building during the early recovery. The propensity of high school graduates to seek a college degree rather than learn a skilled trade also is causing a gap in certain industries.

Worker mobility is another strong contributor to the shift. The recession hit older white male workers harder, and many of these unemployed were less inclined to relocate themselves and their families for potential employment prospects. Young workers likewise are less inclined to move far from family and friends than they were in the past.

For these reasons, the shift in the Beveridge Curve tells us that we may be dealing with a new normal in the labor market for several more years.


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