The national unemployment rate dropped to 5.5% due with the number of people dropping out of the labor for rising by 354,000 in February to a record 92,898,000, which is the highest number of Americans not in the labor force in history.
Payroll jobs increased an unbelievable 295,000 in February after increases of 239,000 in January and 329,000 in December. January and December were revised down a net 18,000.
Average hourly earnings continued to be stagnant, rising 0.1%, compared to 0.5% in January. Expectations were for a 0.2% gain.
The labor force participation rate declined to 62.8%.
“Despite concerns that energy job cuts, worker strikes, and inclement weather would weigh on February’s headline number, today’s jobs report showed a pickup in hiring to 295,000. Even with the downward revision of 18,000 jobs in January, the three-month average job gain moderated to a still robust 288,000,” said Doug Duncan, chief economist for Fannie Mae. “Other aspects of the labor market were not as rosy, however. Wage gains were muted, and the two-tenths drop in the unemployment rate to 5.5% was largely a result of people leaving the labor force. We’re seeing some disconnect between the strong labor market and lackluster housing activity in early 2015.
“The February National Housing Survey, to be released next Monday, is expected to show a marked improvement in consumers’ view regarding the direction of the general economy amid choppy improvement in sentiment regarding housing. We maintain our belief that once upbeat hiring translates into stronger income growth, which we believe it likely will, a stronger housing recovery will follow,” Duncan said.
Private payrolls increased 288,000 in February after a 237,000 gain the month before. The median forecast was for 225,000.
The biggest segment of job gains came in food services, which saw employers add 59,000 jobs. Goods-producing jobs increased 29,000 after a 64,000 boost in January. Manufacturing increased just 8,000 after rising 21,000 in January.
Construction advanced 29,000 in February after gaining 49,000 the month before. Mining declined 9,000 after slipping 6,000 in the month before.
In February, employment in health care rose by 24,000. Transportation and warehousing added 19,000 jobs in February and retail trade gained 22,000 jobs.
Government jobs rose by 7,000 in February after a rise of 2,000 the month before.
The average workweek held steady at 34.6 hours, equaling expectations.
Based on this report, the odds of a June rate increase by the Federal Reserve just went up.