Economic Watch: Unemployment Falls Again, Factory Activity Down

Both the unemployment rate and the number of people without jobs fell in February, according to Labor Department figures released Friday.

Non-farm employment increased by 295,000 jobs, pushing the unemployment rate down to 5.5%, the lowest since May 2008, following a 5.7% rate in January. This compares to a peak rate of 10% in October 2009, during the Great Recession, while February marks the 12th consecutive month of more than 200,000 jobs added.

Job gains in February occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing.

Transportation and warehousing added 18,500 jobs in February, with most of the gain occurring in couriers and messengers. Employment in transportation and warehousing grew by an average of 14,000 per month over the prior 12 months. In the for-hire trucking sector 2,600 jobs were added in February.

While the number of overall jobs added in January was unrevised from its previous estimate, December’s figure was lowered from 257,000 to 239,000.

Over the past year, the unemployment rate and the number of unemployed persons is down by 1.2 percentage points and 1.7 million, respectively.

The one down note for the report was the lack of growth in wages, increasing just 0.1% in February, less than January’s increase. The February hike translates into a 2% annual gain, down from January’s pace of 2.2%.

“A better-than-expected headline report in February, however, the momentum of fourth quarter hiring has clearly slowed in the first quarter of the year. Furthermore, after a brief boost to earnings at the start of the year, wage pressures remain meager, falling back in line with trend growth established since the end of the Great Recession,” said Sterne Agee Chief Economist Lindsey Piegza. “And, while the unemployment rate continues to decline, the downward pressure reflects discouraged Americans dropping out of the labor force as much as it reflects the unemployed finding gainful employment.”

Factory Shipments and New Orders Drop

The report follows a separate one from Thursday from the Commerce Department showing shipments of U.S. factory made goods and new orders for them both posted declines in January, but there was a gain in one key indicator.

The drop in shipments, 2% compared to December, is the fifth out of the past six months. It increased 0.9% in December from November. Shipments of non-defense capital goods, excluding aircraft shipments, increased 0.1% in January, up from an initial report showing a 0.3% decline.

New factory orders fell for the sixth straight month in January, down 0.2% from December, and follows a revised 3.5% decline in the final month of last year.

On a more positive note, new orders for non-defense capital goods, excluding volatile aircraft orders, increased 0.5% in January. Analysts see this as a generally positive sign of confidence in the economy by businesses and plans for increased spending.

New orders for durable goods, those designed to last at least three years, picked up by 2.8% following two consecutive monthly drops. It was led by a 9.7% increase in new transportation equipment orders.

Shipments of manufactured durable goods fell 1%, the third decline out of the past four months, slightly less than an initial report.