Implications: If there were any remaining doubts the Fed would raise rates next week, today's report put them to rest. Job growth was strong, the unemployment rate is below the Fed's long-term goal, and wages are accelerating. Nonfarm payrolls rose 235,000 in February. Private payrolls are now up 84 months in a row, the longest streak since at least the 1920s. Meanwhile, civilian employment, an alternative measure of jobs that includes small-business start-ups, increased 447,000. Some of the improvement is due to unusually warm February weather. In the past 20 years, an average of 307,000 workers missed work due to bad weather in February; this February it was only 157,000. In other words, without good weather, civilian employment would have been up about 297,000, which is still a fast pace. (Warning: no, you should NOT also subtract 157,000 from the payroll number. It's a separate survey and less responsive to the effects of weather.) The jump in employment helped push the jobless rate back down to 4.7% versus the Fed's long-term target of 4.8%. Remember when some analysts were saying the only reason unemployment is down is fewer people looking for work? That story has been wrong for years. The labor force (people who are either working or looking for work) has grown in every calendar year since 2010, is up 7.4 million since the end of 2009, and up 1.6 million in the past twelve months. Although the participation rate remains low by the standard of the past 40 years, it's no longer consistently declining. At 63.0% it's tied for the highest level in almost three years. Notice also the theory that "all the new jobs are part-time jobs"? Since the end of 2009, part-time jobs are up only 75,000 while full-time jobs are up more than 14.5 million. Perhaps most important is plenty of consumer purchasing power, with wages per hour up 2.8% in the past year while total hours worked up 1.4%. As a result, total wages are up 4.3% from a year ago, and this excludes fringe benefits and irregular bonuses/commissions. Not every labor report will be as strong as this one, but with better policies on the way, look for continued robust gains in jobs and even faster wage gains in the year ahead.
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