What's Happening in the Nation

Total nonfarm +217,000 February 1994 Total private +210,000

The February employment increase, while substantial, still is not a full rebound from the impact of unusually severe winter weather on January's data. Continued extreme weather, including ice, sleet, and snow storms during the February survey week that closed many business for a day or more, took its toll on employment in some industries and hours in nearly all industries. Employment was negatively affected in construction, eating and drinking places, and agricultural services. Amusements and recreation was still negatively impacted by the weather, as it regained only half of January's large losses. Employment fully rebounded in most other types of retail establishments as well as in business services. Wholesale trade, trucking, and finance remained strong in February, as did health services and social services. A particularly bright spot in manufacturing was industrial machinery and electronic equipment; both had a large February increase and have made a mild comeback in recent months. Although February managed to show a large net job gain in spite of the weather, the 0.5 decline in hours far overwhelms the employment impact in the aggregate hours index, which is down 1.6. This decline in total hours spent on producing goods and services in February, together with a relatively small 2 cents increase in average hourly earnings, is very important for understanding what happened to the economy in February. There is no reason to believe, however, that the decline in hours represents anything other than the impact of the extreme weather.

The Personal Income side of GDP should be down significantly, as the decline in hours will far outweigh the gains in employment and earnings. Our impact on FRB's Industrial Production Index also will be strongly negative, reflecting the large decline in hours. Our contribution to the Index of Leading Economic Indicators will be -0.28, due to the 0.7 hour decline in the manufacturing workweek. Our data will have a negative impact on the Index of Coincident Economic Indicators as the increase in employment is more than offset by the negative influence on personal income and industrial production.

MINING - Mining employment remained unchanged in February, following a decline of 3,000 jobs in January. Employment is essentially unchanged over the past year, presently only 1,000 jobs above its February 1993 level. None of mining's component industries showed any significant movements this month. COAL MINING - Coal mining was essentially unchanged in February, increasing by 1,000 jobs. The nominal gain was, however, the industry's first gain unrelated to strike activity since March 1993. Here, as well, employment levels are unchanged over the past year. Since the return of 16,500 strikers to the payrolls in December, employment has remained steady.

OIL AND GAS EXTRACTION -Employment in Oil and Gas Extraction managed to remain flat in February, after posting modest losses for the prior 4 months. Employment here is still 4,300 (1.3%) above its year-ago level, having retained some of the gains registered in April-September 1993.

CONSTRUCTION - Construction employment declined by 22,000 in February, its second consecutive month of losses mostly attributable to extremely bad winter weather. After adding almost 200,000 jobs in 1993, and 73,000 in the fourth quarter alone, the construction industry has lost 42,000 jobs in the first 2 months of 1994. However, the industry is still 2.5 percent above its February 1993 level. Declines in General building contractors (SIC 15) and Heavy construction (SIC 16) were slightly offset by an increase in Special trade contractors (SIC 17). The Los Angeles earthquake had a small, positive effect on Construction employment in February.

MANUFACTURING - Manufacturing employment increased by 12,000 jobs in February, its fifth consecutive increase. Both the durable and non durable industries added 6,000 jobs this month. In the durable goods industries, large increases in Industrial machinery and equipment (SIC 35) and Electronic and other electrical equipment (SIC 36) were partially offset by smaller losses in other industries, In the durable goods industries five of the ten two-digit industries added jobs in February. In the nondurable industries Food and kindred products (SIC 20) posted a fairly large gain in February. Four of the ten nondurable industries added jobs in February. The bad weather in much of the country during the survey week had very little impact on employment levels in the manufacturing industry. The weather, however, was responsible for a large decline in the Average weekly hours for manufacturing. Every industry, with the exception of Transportation equipment (SIC 37),posted a decline in the Average weekly hours in February. Ten of the twenty manufacturing industries experienced declines in the workweek of greater than 1 hour.

TRANSPORTATION AND PUBLIC UTILITIES - After a strong increase of 8,000 in January, TPU continued to show strength last month by adding 12,000 to payrolls. TPU is up 18,000 from its November 1992 trough. All of the gains were in Transportation. Communications and Public Utilities remained about unchanged in February.

WHOLESALE TRADE - Wholesale trade continued on its trend of hearty growth by gaining 14,000 jobs in February. This increase is the sixth in a row and now brings the total up to 62,000 jobs gained since August 1993. The industry has added 132,000 jobs since its trough in September 1992, or 2 percent of the workforce. The industry appears to be mimicking the job growth attained last year, and if this trend should continue, Wholesale will easily match the all time peak employment achieved in March 1989. The growth in February was distributed evenly, with a 6,000 increase in Durables and an 8,000 increase in Nondurables.

RETAIL TRADE - All employment increased by 58,000 seasonally adjusted in February 1994. Employment exceeded the 20 million level for the first time. Since reaching a trough in December 1991, employment has increased by 774,000 or 4 percent. The largest increases occurred in General merchandise stores up 27,000, Food stores up 15,000, Automotive dealers up 12,000 and Misc. retail up 12,000. The largest decline occurred in Eating and drinking places down 30,000. AWH declined by .3 seasonally adjusted as every two-digit industry declined except Merchandise stores. The AWH decline can be attributed to the severe weather that occurred during the survey week. The final Christmas buildup total for 1993 of 599,00 is 94 percent of the average buildup and the largest since 1988. The current layoff is 168 percent of the 1993 buildup and 4 percent above the average layoff.

FINANCE, INSURANCE, AND REAL ESTATE - FIRE added 15,000 jobs to payrolls in February. This increase is 2,000 over the 6 month average of 13,000. Overall, FIRE has been on a positive trend for the past 19 months adding 123,000 jobs since its trough in August of 1992 at an average rate of 7,000 per month. Since February of last year, 104,000 jobs have been added which constitutes 84% of the total increase. The majority of the growth has been in Finance.

SERVICES - The above-average growth in services jobs in February follows a highly unusual loss in January, attributed to adverse weather conditions. Both January and February weather was bad in much of the country, and it is not easy to determine which month had worse weather. In any event, the stronger-than-average growth in February seems to represent a partial compensation for the January movement. From January 1993 to January 1994, the average growth in services was 90,000 jobs per month. Services lost 21,000 jobs in January and gained 121,000 in February. The February strength was most of all in business services (SIC 73), which gained 62,000 jobs to exceed its average monthly gain by 26,000. Business services had lost 11,000 jobs in January.

GOVERNMENT - Government employment grew by 7,000 in February, as gains in State and local government were offset by a loss in the Federal Government.

FEDERAL GOVERNMENT - The Federal government lost 9,000 jobs in February, for a total loss of 30,000 jobs in 1994. Federal Government employment now stands at the lowest level since August 1986.

STATE GOVERNMENT - State government gained 4,000 jobs in February after losing 15,000 jobs in January. This sector has gained 48,000 jobs over the year; growth in the non-education sector has slightly exceeded growth in the education sector during this period.

LOCAL GOVERNMENT - Employment in local government grew by 12,000 this month. Over the year, local government has added 175,000 jobs, with the education sector responsible for about two-thirds of the growth.

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