WASHINGTON — The February employment report shows continued growth and no signs of snowstorm impact, but the underlying data are not as strong as the eye-popping headlines.

February payrolls surged 236,000, well above both the median estimates in surveys and the whisper numbers, but January-December revisions were down 15,000 on net and this represents only modest growth in context. That is, the 3-month average for jobs is just up 191,000 and this is only slightly above the 2012 average, showing the U.S. economy is not really taking off.

There was no real problem from the snow in the payroll survey week. The unadjusted number of workers not at work due to weather was 237,000 versus 232,000 in January.

The unemployment rate fell 0.2 point to 7.7% in confirming strength. But the rate had popped up a tenth the prior month, and most of the February decline was due to a drop in the labor force, mainly among male teens. Unemployment still is too high.

Hours and earnings were up. These suggest rising income and production.

February jobs composition included: manufacturing rose 14,000, construction grew 48,000, retail gained 23,700, motion pictures increased 20,800, temp jobs added 16,000, health jumped 32,000, accounting climbed 10,900, and government fell 10,000 (split between Federal and state education).

The federal sequester and budget cuts ahead might hurt payrolls, so we would take this report with a large dose of caution.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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