Non-farm payrolls, average hourly earnings rise

US non-farm payrolls rose by 295,000 in February 2015 from a downwardly revised January number of 239,000 compared to 257,000 reported earlier. However, the number of long-term unemployed who have been without jobs for more than 27 weeks stood at 2.7 million in February, little changed from a month ago. These people made up 31.1% of the unemployed.

Industry-wise, job gains were led by food services and drinking places, professional and business services, construction, health care, and transportation and warehousing.

The unemployment rate fell to 5.5% in February, the lowest since May 2008, from 5.7% a month ago. This was primarily because people dropped out of the labor force.

Both the employment-population ratio and the labor force participation rate were little changed in February. While the employment-population ratio was unchanged at 59.3%, the labor force participation rate edged down to 62.8% from 62.9% in January.

Among major worker groups, the seasonally adjusted unemployment rate for adult men edged down to 5.2% in February from 5.3% a month ago. For adult women, it fell from 5.1% in January to 4.9% in February.

Average hourly earnings rose $0.03 month-on-month in February to $24.78, following a surge by $0.12 in January. From a year ago, hourly earnings are up 2.0%, lower than the historical trend. Utilities saw the quickest growth in hourly wages by 1.0%, to $22.94 an hour. Construction saw a 0.3% fall in hourly wages to $26.91.

The non-farm payrolls report affects industrials-related ETFs such as the SPDR Industrial Select Sector Fund (XLI) and the First Trust Industrials AlphaDEX Fund (FXR), and materials-related ETFs such as the SPDR Materials Select Sector Fund (XLB) and the iShares US Home Construction ETF (ITB). These two growth sectors are affected if the jobs report is a positive surprise. XLB has DuPont (DD), Monsanto (MON), and Dow Chemical (DOW) as its top three holdings. They comprise ~30% of the portfolio.

A pickup in hiring signals a general improvement in the economic situation. So this report also has an impact on broad-based ETFs such as the SPDR S&P 500 ETF (SPY), the SPDR Dow Jones Industrial Average ETF (DIA), and the iShares Core S&P 500 (IVV).

In the next article, we’ll look at another jobs report that impact markets, the ADP Employment Report.