In February, unemployment in the U.S. fell to 7.7 percent, its lowest point in four years according to the Labor Department, as 236,000 new jobs were added. While employment growth was the leading cause for the falling unemployment rate, it was pushed lower still by a decreased participation rate, which decreased by 0.1 percent. Employment growth managed to significantly beat consensus economist estimates that employment would grow by about 160,000 positions in February. Nearly 2.4 million jobs have now been added to the U.S. economy over the last twelve months.
While there was growth across most sectors of the economy, there were pockets that saw notable levels of growth. Construction, which has seen minimal growth over the last several years, grew by 48,000 positions in February, keeping pace with the overall rate of growth in the U.S. Additionally, temporary help services grew by 16,100 positions and accounting and bookkeeping services grew by 10,900. One interesting area for growth was the motion picture and sound recording industry, which grew by 20,800, from just 374,800 total positions in January.
The unemployment rate for those with a bachelor’s degree or higher edged up slightly from 3.7 to 3.8 percent on an increased participation rate with total employment growing significantly. The unemployment rates for those with high school degrees but not bachelor’s degrees actually fell substantially in February. Yet, for this group, unemployment declines were driven more by a falling participation rate than growing employment. The management, professional and related occupations unemployment rate dropped year-over-year from 4.2 percent to 3.8 percent as total employment grew by close to 1.4 million in the last year.
Put in a historical context, February’s unemployment report shows monthly growth that is the second-strongest since last February, when employment grew by more than 270,000 jobs. For the past several years, though, February has been the last month of strong employment growth before a deceleration going into the summer.
In March, another wrinkle will be added with sequestration, which took effect on the 1st of the month. Observers will be looking closely to see what effects it will have on employment in the coming months. While layoffs are expected to affect government contractors almost immediately, government agencies will instead mostly be relying on furloughs which begin this month.
Overall, this report far surpassed many expectations and was made all the more impressive by the headwinds seen in Europe’s employment markets. Employment continues to grow and, even with sequestration coming into effect, expectations are for growth to continue for the remainder of the year as the economy looks to consumer and corporate demand to make up for the decline in government spending.