KNOWLEDGE CENTER

Knowledge Center Archive

Mar
13
2012

Podcast: February 2012 Payroll Report

By Sean P. Simko

February’s nonfarm payroll number came in above expectations at 227,000 jobs created, well above January’s revised gain of 173,000. Hiring within the U.S. is increasing, but it needs to accelerate at an even faster pace in order to move the unemployment rate lower and keep consumer confidence elevated.

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Welcome, my name is Sean Simko. I am Managing Director of SEI Fixed Income Portfolio Management. This commentary focuses on the release of February’s employment data, including the nonfarm payroll number and the market’s initial reaction.

February’s nonfarm payroll number came in above expectations at 227,000 jobs created. Consensus was for the creation of 210,000 jobs. January’s nonfarm number was revised higher by 41,000 to 284,000. The prior day’s ADP report also showed an increase in hiring activity with the addition of 216,000 jobs. This was well above January’s revised gain of 173,000.

Private payrolls added 233,000 jobs, with January’s data revised upward by 28,000 to 285,000. The participation rate, which measures the share of working-age people in the labor force, increased to 63.9% from 63.7%. This was encouraging news for the economy and the markets. Hours worked by individuals employed by factories increased slightly to 41.

Manufacturing gained 31,000 jobs, while jobs in retail trade fell by 7,000. The leisure and hospitality sector saw an increase of 44,000 jobs, and construction lost 13,000 jobs. Temporary help increased by 45,000, which is always a good sign for future hiring. The unemployment rate held steady at 8.3%.

Hiring within the U.S. is increasing, but it needs to accelerate at an even faster pace in order to move the unemployment rate lower and keep consumer confidence elevated.

The Treasury market remains range-bound, pushing to the upper side as concerns about the sustainability of economic growth linger. The move reflects the recent view that the economy may decelerate to some degree due to higher commodity prices and ongoing uncertainties regarding Europe. The sector weakened after the nonfarm report, with the two-year yield hovering at 31.0 basis points and the 10-year yield selling off 3.0 basis points to 2.08%. The 30-year bond was off 3.0 basis points to yield 3.19%.

February’s labor report was a good one, and the upward revisions to the two prior reports made it even better. We feel the labor market should continue to improve as we move through the first quarter of 2012.

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