First, you’ll notice that the Bureau of Labor Statistics points out that the
payroll jobs number came in at a robust 235,000 for the month. Secondly, you will note the unemployment rate
came in at 4.7 percent, dropping from 4.8 percent in January 2017.
“Total nonfarm payroll employment rose by 235,000 in February,
and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of
Labor Statistics reported today. Employment gains occurred in construction,
private educational services, manufacturing, health care, and mining.”
Employment-Population Ratio hits an Eight Year High There’s no doubt that the February 2017 labor report
was very positive. To key on one point
in a overall very good month, let’s take a quick look at the
Employment-Population Ratio. The Employment-Population
Ratio is measures the employed divided by the Civilian Noninstitutional
Population (those 16+ years of age who are not in the military or otherwise
institutionalized). In coming in at
60.0%, this is the best reading since February 2009 (60.3%) --- a very long
eight year period.
FED (Federal Reserve) and the Employment-Population Ratio
It’s important to note that the FED looks upon the Employment-Population Ratio
as an important data point in formulating monetary policy.
This is a very short piece, but we wanted to make sure
you were aware that Federal Reserve [Federal Open Market Committee (FOMC)] will
be meeting on March 14-15 (https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm). In all likelihood, the FOMC will vote to
raise the targeted Fed Funds rate by 0.25% or even 0.50% (from the current
0.50-0.75% targeted range) based in part on the much improved
Employment-Population Ratio. Having said
this, there is much more critical analysis that we will present in the near
future regarding the impending Fed Funds target rate hike.
Employment Situation Rundown
In February 2017 the following occurred in labor markets:
The Civilian Noninstitutional Population expanded by 164,000
The Labor Force grew by 340,000 [Labor Force 340,000 =
Employed 447,000 + Unemployed -107,000]
The Labor Force Participation Rate (LFPR) climbed to
Employed grew by 447,000
Employment-Population Ratio again rose to 60.0%...this
is the highest number since February 2009 (60.3%)!
Unemployed dropped by 107,000
U3 Unemployment Rate dropped to 4.7%
The ‘Not in the Labor Force’ component went down by 176,000
Not in the Labor Force (NLF) = Civilian
Noninstitutional Population (CNP) – Labor Force (LF) [Employed + Unemployed]