The Bureau of Labor Statistics has released the February Employment Situation Report.

Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing.

ESTABLISHMENT SURVEY DATA....

RTRS-U.S. FEB NONFARM PAYROLLS +192,000 (CONSENSUS +185,000) VS JAN +63,000 (PREV +36,000), DEC +152,000 (PREV +121,000)

RTRS-U.S. FEB NONFARM PAYROLLS INCREASE LARGEST SINCE MAY 2010 (+458,000)

RTRS-US FEB PRIVATE SECTOR JOBS +222,000 (CONS +190,000), JAN +68,000 (PREV +50,000)

RTRS-U.S. FEB FACTORY JOBS +33,000 (CONS. +25,000) VS JAN +53,000 (PREV +49,000)

RTRS-U.S. FEB GOODS-PRODUCING JOBS +70,000, CONSTRUCTION +33,000, PRIVATE SERVICE-PROVIDING JOBS +152,000, RETAIL -8,000

RTRS-U.S. FEB GOVERNMENT JOBS -30,000 VS JAN -5,000 (PREV -14,000)

RTRS-U.S. FEB AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS 0.0 PCT (CONS +0.2 PCT) VS JAN +0.4 PCT (PREV +0.4), TO $22.87 VS JAN $22.86; FEB YEAR-ON-YEAR EARNINGS +1.7 PCT

RTRS-U.S. FEB AVERAGE WORKWK ALL PRIVATE WORKERS 34.2 HRS (CONS 34.3 PCT) VS JAN 34.2 HRS (PREV 34.2), FACTORY 40.5 VS 40.4, OVERTIME 3.3 VS 3.1

RTRS-U.S. FEB AGGREGATE WEEKLY HOURS INDEX FOR ALL PRIVATE WORKERS +0.2 PCT VS JAN UNCH

Excerpts from the Release....

Total nonfarm payroll employment rose by 192,000 in February. Job gains occurred in manufacturing,construction, and several service-providing industries. Since a recent low in February 2010, total payroll employment has grown by 1.3 million, or an average of 106,000 per month. The change in total nonfarm payroll employment for December was revised from +121,000 to +152,000, and the change for January was revised from +36,000 to +63,000.

Manufacturing employment rose by 33,000 in February. Almost all of the gain occurred in durable goods industries, including machinery (+9,000) and fabricated metal products (+7,000). Manufacturing has added 195,000 jobs since its most recent trough in December 2009; durable goods manufacturing added 233,000 jobs during this period.

Construction employment grew by 33,000 in February, following a decline of 22,000 in January that may have reflected severe winter weather. Within construction, specialty trade contractors accounted for the bulk of the February job gain (+28,000).

Employment in the service-providing sector continued to expand in February, led by a gain of 47,000 in professional and business services.

Employment services added 29,000 jobs, and employment rose by 7,000 in management and technical consulting. Within employment services, the number of jobs in temporary help services edged up over the month.

Health care employment continued to increase in February (+34,000). Over the prior 12 months, health care had added 260,000 jobs, or an average of 22,000 jobs per month.

Transportation and warehousing employment increased by 22,000 in February, with half of that gain in truck transportation (+11,000).

Employment in both state and local government edged down over the month. Local government has lost 377,000 jobs since its peak in September 2008.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.2 hours in February. The manufacturing workweek for all employees rose by 0.1 hour to 40.5 hours, while factory overtime rose by 0.2 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.5 hours.

In February, average hourly earnings for all employees on private nonfarm payrolls increased by 1 cent to $22.87. Over the past 12 months, average hourly earnings have increased by 1.7 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $19.33.

HOUSEHOLD SURVEY DATA....

RTRS-U.S. FEB JOBLESS RATE 8.9 PCT (CONSENSUS 9.1 PCT) VS JAN 9.0 PCT (PREV 9.0 PCT)

RTRS-U.S. FEB JOBLESS RATE LOWEST SINCE MATCHING 8.9 PCT IN APRIL 2009

The number of unemployed persons (13.7 million) and the unemployment rate (8.9 percent) changed little in February. The labor force was about unchanged over the month. The jobless rate was down by 0.9 percentage point since November 2010.

Among the major worker groups, the unemployment rates for adult men (8.7 percent), adult women (8.0 percent), teenagers (23.9 percent), whites (8.0 percent), blacks (15.3 percent), and Hispanics (11.6 percent) showed little or no change in February. The jobless rate for Asians was 6.8 percent, not seasonally adjusted.

The number of job losers and persons who completed temporary jobs, at 8.3 million, continued to trend down in February and has fallen by 1.2 million over the past 12 months.

The number of long-term unemployed (those jobless for 27 weeks or more) was 6.0 million and accounted for 43.9 percent of the unemployed.

Both the civilian labor force participation rate, at 64.2 percent, and the employment-population ratio, at 58.4 percent, were unchanged in February.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.3 million in February. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In February, 2.7 million persons were marginally attached to the labor force, up from 2.5 million a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.0 million discouraged workers in February, a decrease of 184,000 from a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

The remaining 1.7 million persons marginally attached to the labor force in February had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Keith Hall, Commissioner of the BLS, summarizes the data...

In February, nonfarm payroll employment rose by 192,000, and private-sector employment increased by 222,000.  From its recent low point in February 2010, payroll employment has increased by 1.3 million, or an average of 106,000 per month.  Over the same period, private-sector employment rose by 1.5 million, or an average of 127,000 per month.  Most measures from the survey of households showed little movement in February. At 8.9 percent, the unemployment rate changed little over the month but is down from 9.8 percent in November.  Of the 13.7 million unemployed in February, 43.9 percent had been jobless for 27 weeks or more, essentially the same as in the prior month.  In February, the labor force participation rate was unchanged at 64.2 percent. Average hourly earnings of all employees on private nonfarm payrolls rose by 1 cent in February to $22.87.  Over the past 12 months, average hourly earnings have risen by 1.7 percent.  From January 2010 to January 2011, the Consumer Price Index for All Urban Consumers increased by 1.7 percent.
    
Plain and Simple: When viewed on the spot, this was a strong monthly jobs report.  The headline NFP print was close to consensus. The unemployment rate fell without a decline in the labor force participation rate. Manufacturing conditions continue to improve as emerging economies use our resources to build their own. Educated/High-skilled workers are finding demand for their services. The healthcare industry has created an average of 22,000 jobs a month since last February. The construction industry contributed 33,000 jobs, but most folks will question whether or not the uptick was a weather related correction. The bad news is we'll need to see an average of at least 200,000 jobs created every month to meet the Fed's 2011 growth targets.  Since last February, payroll employment has increased by 1.3 million, or an average of 106,000 per month.  Revisions added 27,000 jobs to the January report, which brings the 2011 average to 127,500 so far.   That means job creation still isn't meeting the Fed's targets. A point we've been making repeatedly is a lack of wage growth. Over the past 12 months, average hourly earnings have risen by 1.7 percent. Compare that to a 1.7 percent rise in CPI and you've got zero real wage growth. Rising energy and food prices are squeezing Main Street's profit margins. READ MORE ABOUT INFLATION AND THE MAIN STREET MARGIN SQUEEZE

Market Reaction: COUNTERINTUITIVE. SHORT COVERING IN THE BOND MARKET. RATES LOWER

After digesting jobs data stocks are having difficulty  finding a reason to rally and bonds are benefiting from it. The monthly report was encouraging but job creation is not yet broadbased enough to warrant new found optimism.  This isn't surprising given ongoing conflict in Northern Africa and the Middle-East and the potential for further jumps in food and energy costs. The margin squeeze is in process.  It also tells us investors are not yet convinced the Fed should be raising the overnight lending rate, which should keep the benchmark 10-year note from crossing into the 4.00% handle. 

10s are +9/32 at 100*27 yielding 3.522%.

FNCL 4.5s are +12/32 at 101-20.

The 2s/10s curve is steeper as short positions are covered in the short-end of the yield curve.

NYMEX Crude Oil is +1.40 at 103.31

If you floated through the Employment Situation Report, loan pricing should be no worse on a day to day basis. You will actually see improvements. With $66 billion in 3s/10s/30s Treasury supply to be auctioned next week, we are hesitant to get too excited about a huge bond market rally today, but we'll be keeping an eye on the stock lever.