There's alot to like about this morning's job report. Though warmer than usual weather and seasonal adjustments may have played some role, there's clearly an underlying strengthening in the job market. The economy has now added more than half a million private-sector jobs in the first 2 months of 2012. While there's been criticism that a major reason for recent declines in the unemployment rate were due to people leaving the labor force, the participation rate actually increased from 63.7% to 63.9% in February as an additional 400,000+ adult women entered the labor force. Other positive results include the lowest u6 measure of unemployment since January 2009 (14.9%); most of the jobs added were full time; those working part-time for economic reasons declined by 100,000, ... Which industries added the most jobs? Health care added almost 50,000 jobs; temp agencies added about 45,000; and employment in food services and drinking places rose by 40,000. Though jobs in the latter two categories tend to be lower paying, the increase in temp jobs tends to be a positive sign for future job growth.
Does this mean that the economy is accelerating and strong growth is here to stay? Looking back at 2011, the economy added almost 240,000 jobs a month from February to April, but then added just over 110,000 jobs per month from May to November. Though employment grew by about 1.4% in 2011, GDP grew by 1.7%, indicating that growth in productivity was quite low. In order to sustain job growth at this rate, economic growth needs to be closer to 3%. Given consensus forecasts of about 2.5% growth along with a minor global slowdown (slower growth in China and Brazil along with a European recession) and high gas prices, the most likely scenario is modest economic growth with some downside risk, which implies a slowdown in employment growth as we go further into 2012. The US economy will continue to make progress, barring a shock, but not robust growth by any historical standard.
By the way, where do we stand compared to before the recession? The economy still has 5.285 million fewer jobs than at the end of 2007, a decline of 3.8%. On a more positive note, the US economy has added 3.45 million jobs since the low set in February 2010.