February Payroll Gains Rebound, Sort Of

Payroll job growth rebounded in February, after the soft January report. Private-sector payroll jobs were reported as rising 230,000 in February, with the previous two months' gains revised up by 30,000. This was essentially a mirror image of last month's news, when jobs growth was soft with downward revisions... and that January report was the mirror image of the December report.

So it goes. We talk a lot here about month-to-month random variation in the economic data. The payroll numbers are a "poster child" for this, with the whipsaw actions of recent months. Beneath all this monthly chop, payroll job growth appears to be continuing at a stable pace that the optimists say is "strong" and that other folks are less satisfied with.

While the February jobs news was better, there were some "asterisks" within the report. The jobs measure we track most closely, private-sector payroll jobs excluding construction and retailing, rose only 156,000 in February, and upward revisions to January still left that month's gains at only 105,000. Both of these gains are below the 166,000 per month average of the last few years, as seen in the accompanying chart.

In other words, much of the rebound in the headline number came from outsized gains in retailing (up 55,000) and construction (up 19,000). This would be fine if those gains are for real, but the reason we abstract from these two sectors is precisely because of their extremely volatile seasonal swings, especially at this time of year. (Before seasonal adjustment, retailing jobs fell by 142,000 in February, after a 278,000 decline in January, which is a testament to the seasonal volatility there.) It would be a stretch to tout any recent slowing in "underlying" job growth, but the last two months' data have been less than spectacular.