Key Takeaways: Manufacturing employment rose by a whopping 31,000 in February, with the sector continuing to add net new jobs at a solid pace and with average weekly earnings for production workers up 3.8 percent year-over-year. The labor market is one of the bright spots in a strengthened U.S. economy, boosted by pro-growth policies—including recently-passed tax reform—and an improved global economy. Today’s jobs numbers should further cement the likelihood of another short-term rate hike by the Federal Reserve in March.
The Bureau of Labor Statistics reported that manufacturers added 31,000 workers in February, and revisions in the December and January data increased employment in the sector by 28,000 in total from previous estimates. As such, the latest jobs numbers confirm that the labor market has tightened significantly, with manufacturers increasing employment by a rather robust 18,876 per month on average since the end of 2016.
That is quite a turnaround from the sluggish job growth in 2016, and it is a sign that firms have continued to accelerate their hiring as the economic outlook has strengthened and demand and production have improved considerably. Indeed, manufacturers have told us that challenges in recruiting new workers is their primary business concern right now.
Along those lines, average weekly earnings for production and nonsupervisory employees in manufacturing rose from $891.63 in January to $900.55 in February. That translated into 3.8 percent growth over the past 12 months, up from $867.30 in February 2017, which further illustrates the strength of the labor market right now.
Since the end of the Great Recession, manufacturing employment has risen by 1,161,000 workers, with 12.61 million employees in the sector in this report. That is the highest level of manufacturing employment since December 2008.
Overall, nonfarm payrolls increased by 313,000 in February, the fastest monthly pace since July 2016 and well above the consensus estimate of around 200,000. Over the past 14 months, the U.S. economy has added 195,714 each month on average—a strong figure. Meanwhile, the unemployment rate was unchanged at 4.1 percent for the fifth straight month, continuing to be the lowest level since December 2000. In addition, the labor force participation rate ticked up from 62.7 percent to 63.0 percent, matching the rate in September, which was the best since November 2013.
In February, durable goods manufacturers added another 32,000 workers on net, but employment at nondurable goods firms fell by 1,000. The largest increases included transportation equipment (up 8,200, with motor vehicles and parts up 6,200), fabricated metal products (up 5,900), machinery (up 5,600), primary metals (up 3,700), wood products (up 3,300), furniture and related products (up 1,900), petroleum and coal products (up 1,800) and nonmetallic mineral products (up 1,600), among others. In contrast, February employment declined for plastics and rubber products (down 2,000), chemicals (down 1,100), textile product mills (down 700), textile mills (down 200) and apparel (down 100).