There has been a distinct shift in the composition of job gains in the first full job report under Donald Trump: whereas in the recent past, jobs under Obama were mainly focused in low-paying, minimum-wage categories, such as retail, hospitality, education and, of course, food service and drinking places, in February there was a notable change with some of Trump's favorite sectors, such as manufacturing and construction posting dramatic gains.
While all sectors of the economy, with the exception of retail and utilities, expanded payrolls in February, it was the jump in manufacturing employment, which increased 28,000, and the largest increase since August 2013, that caught analysts' attention. Employment rose in food manufacturing (+9,000) and machinery (+7,000) but fell in transportation equipment (-6,000). Over the past 3 months, manufacturing has added 57,000 jobs.
And then there was the surge in highly-paid construction payrolls, which soared by a whopping 58,000, the biggest gain since March 2007, boosted by warmer weather. Construction has now added 177,000 jobs over the past 6 months, in what has been interpreted by analysts as good news for the US housing market.
On the other hand, confirming the woes of the retail sector, employment here fell 26,000 after a gain of 39,900 jobs in January. In recent months, retailers including J.C. Penney and Macy have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations: these mass layoffs are finally starting to be noticed by the BLS.
Other notable highlights:
- Specialty trade contractors (+36,000) and heavy and civil engineering construction (+15,000) saw major gains. .
- Employment in private educational services rose by 29,000 in February, following little change in the prior month (-5,000). Over the year, employment in the industry has grown by 105,000.
- Health care employment rose by 27,000 in February, with a job gain in ambulatory health care services (+18,000).
- Employment in mining increased by 8,000 in February, with most of the gain occurring in support activities for mining (+6,000). Mining employment has risen by 20,000 since reaching a recent low in October 2016.
- Employment in professional and business services continued to trend up in February (+37,000), even though just 3,100 temporary workers were added in February. The industry has added 597,000 jobs over the year.
The visual summary is below.
There is just one question: despite the healthy gains across the board, mostly in high-paying jobs, the average hour wage growth in February disappointed, suggesting that some disconnect between good jobs, and higher wages, still remains. It will be up to the Fed to decide if that "disconnect" is structural or one-time.
