FORTUNE -- After years of stagnant wages, workers might finally be seeing their pay go up.
The Labor Department released its employment situation report Friday morning, announcing that the economy added 175,000 new jobs in February. That number in and of itself isn't big enough to knock anyone's socks off, though it was a significant improvement from the government's revised estimate of 106,500 new jobs on average in both December and January.
But the report's single biggest surprise was a significant jump in average hourly earnings, which rose by 9 cents to $24.31, about twice what economists were expecting. Nine cents might not seem like much, but over the past 12 months, average wages have risen by 52 cents, or 2.2%. If you consider that prices overall have risen just 1.3% over the past year, it's clear that, on average, worker pay is outpacing inflation. That's great news in an economy in which the biggest problem is a lack of demand.
One explanation for the wage jump is the fact that there were significant employment gains in February in the professional and business services sector (79,000 jobs), where wages are much higher than, say, retail, which actually shed 4,000 jobs.
The report included another piece of good news: a decline in the number of people working part-time who wish to be working full-time. That number fell by 71,000 in February, following a dip by more than 500,000 in January. As Jim O'Sullivan, economist with High Frequency Economics, pointed out in a note to clients this morning, this is a figure that the Federal Reserve watches closely to determine the level of "slack" in the labor market. As long as this continues to fall, there's reason to believe that labor market conditions are improving.
That said, the report wasn't rosy all over. Average hours worked actually fell by 0.1 hours in February, which should dampen enthusiasm for the big jump in earnings. Furthermore, job gains have averaged roughly 130,000 new jobs over the past three months, well below the 2013 average of 194,000 per month.
Another worrisome statistic: Job gains in the construction sector were tepid, with builders adding just 15,000 new jobs. This is a sector that many economists hope will power employment gains in 2014, as the housing market has finally recovered enough to require significant new construction. But this is where we would likely see the bulk of the effects of the severe winter weather that much of the country has experienced over the past few months.
Overall, it was a pretty solid report given the tricks the bad weather has played on economic data lately. Markets are taking the news in stride, with the S&P up 0.17% in early-morning trading. This report is also strong enough that we shouldn't expect the Federal Reserve to consider deviating from its plan to slowly reduce the scope of its quantitative easing stimulus program.
Amid declining participation in the job market, the unemployment rate has become a less useful tool to gauge the health of the labor market. The Fed will have to turn to other measurements -- namely, the quits rate -- to guide monetary policy.Christopher Matthews - Feb 11, 2014 10:28 AM ET
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