The Bureau of Labor Statistics reported that hiring grew at the fastest pace since mid-2016 in February, as employers added 313,000 workers to payrolls during the month. This tops consensus estimates of 205,000 jobs added, and comes on the heels of an upwardly-revised 239,000 job gain in the previous month. Job growth was broad-based during the month, with particularly large gains in construction, retail, and manufacturing helping to bolster the overall number.
Hiring has been on a tear recently, with employers topping 200,000 jobs added in four of the past five months and averaging a 242,000 gain per month during that same time frame. Unemployment remained near multi-decade lows at 4.1% in February, as rapid growth in employment kept pace with a sizeable increase in the labor force.
All news was not good in this morning’s report, however, as a significant acceleration in wages continues to elude the economy. Typically, a tight labor market and rapid hiring puts upward pressure on the wages that businesses pay employees. However, average hourly earnings rose a disappointing 0.1% from January’s levels and are now just 2.6% higher than this point last year.
Trends in freight hiring
While hiring in the overall economy has been generally strong for years now, gains in the transportation space (particularly in freight) have been far less impressive. Consider that the total number of employees has grown slightly less than 2% per year on average in the economy over the past few years. Truck transportation employment has performed far worse during this time frame, actually declining during 2016 and averaging less than 1% employment growth per year.
Some of the softness in trucking hires over this span can be attributed to general weakness in the manufacturing sector in the economy, which struggled throughout the latter part of 2015 through 2016. However, the trucking industry continues to face a shortage of available qualified workers. As a result, the pace of hiring in trucking has still been generally weak even as manufacturing activity began its rebound last year.
There are signs that this may be improving however. Trucking companies added 5,600 jobs in February, marking the largest month-to-month increase in jobs since mid-2015. The pace of hiring has improved steadily in each of the past four months, and job growth in trucking is starting to look more like the broader job growth of the economy overall.
Behind the numbers
Overall, this was another in a string of strong job reports and the headline number far exceeded the top range of estimates going into the report. As is often the case, however, the news from February failed to hit on all notes, as the absence of strengthening wage growth remains a theme in overall economy. Earnings have gradually picked up, and inflation remains generally tame, so household have been able to make some gains in real terms. However, the pace of acceleration has fallen far short of what most would expect given the general tightening of the labor market.
The truck hiring numbers over the past few months have been encouraging, but taken in context with other transportation jobs they illustrate some interesting themes in the transportation and logistics space. Truck hires have improved but still lag behind overall transportation jobs in the economy, and tightening regulations and driver shortages will likely continue to stunt freight hiring. Meanwhile, parcel transportation and warehousing jobs have surged as the demands from e-commerce have shifted the focus in activity.
