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It's still a strong job market
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March 5, 1999: 10:18 a.m. ET
February payroll boost of 275,000 exceeds forecast; jobless rate up to 4.4%
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WASHINGTON (CNNfn) - American job growth continued at a strong clip in February, with nonfarm payrolls rising by a greater-than-expected 275,000, the Labor Department said Friday.
The consensus estimate of analysts surveyed by Reuters was an increase of 245,000. The January increase in nonfarm payrolls was revised lower to 217,000 from the originally reported 245,000.
"It's a very strong, very solid report," Labor Secretary Alexis Herman told CNNfn. "Virtually every sector in the economy was growing."
Despite the increase in payrolls, the unemployment rate actually rose to 4.4 percent in February from January's 4.3 percent. That increase is seen by one analyst as a saving grace as far as possible Federal Reserve credit tightening is concerned.
"We've still got a lot of job growth, but it's not pressuring the unemployment rate," Robert Brusca, chief economist at Nikko Securities, told CNNfn. "That's a critical thing for the Fed -- between the unemployment rate and the nice average hourly earnings rate figure, which was up only a penny, I think the Federal Reserve will breathe pretty easily with this report."
Average hourly earnings rose by 1 cent, or 0.1 percent, compared with an increase of 6 cents, or 0.5 percent, in January. The increase was below the 0.3 percent Reuters consensus estimate.
One of the reasons for the increase in payrolls was a 72,000 surge in construction jobs aided by unseasonably warm weather throughout the country.
"I think some of the job growth has been pushed forward," said Brusca, adding that the payroll increase would have been just 200,000 if the construction number was lower. "Behind the surface of these very strong reports, there are signs the economy has begun to slow down."
One possible sign of that slow down: jobs in the manufacturing sector fell by 50,000. That was more than offset by a 123,000 gain in retail industry sector jobs during February.
The average work week was 34.7 hours, up from 34.5 hours in January. The figure was above the 34.6-hour consensus estimate.
The Treasury market rallied sharply after the report. The U.S. 30-year bond was up 2-3/32 to 95-22/32, yielding 5.54 percent; the bond was up 10/32 just prior to the 8:30 a.m. ET release of the report.
"I think the response from the market is basically an indication that everyone believes that we're going to continue to this solid path of growth that we've been on, that the economy continues to perform," said Herman. "Productivity is very much in line with wage gains, so I don't think we see any signs of inflation on the horizon."
"We're not going to see any Fed tightening on the 30th of this month," said Guy Pope, portfolio manager for Columbia Balanced Fund. "A low inflation environment continues, and so the market is reacting positively."
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