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.
A slew of discouraging economic data doesn't bode well for February jobs numbers, but there's still hope for broader recovery.
FORTUNE -- This winter has brought subfreezing temperatures and several feet of snow to much of the country, and the weather has done more than mess with your morning commute.
Cold weather also has a tendency to put a temporary damper on economic activity, as businesses often shut down during heavy snowstorms MOREChristopher Matthews - Mar 6, 2014 11:20 AM ET
More than four years after the Great Recession, the economy is healing. And it could only get better.
By Marc Benioff
FORTUNE -- If I had written a title for President Obama's State of the Union address this week, it would be called "America Rising." When he leaves office in 2017, the U.S. will have experienced a period of critical economic recovery. By the end of 2016, Fannie Mae estimates the MOREJan 31, 2014 3:07 PM ET
The U.S. can achieve a lot by reducing inequality.
By Mohamed A. El-Erian
FORTUNE -- In making inequality a topic of Tuesday's State of the Union speech, President Obama did a lot more than address a phenomenon that undermines America's social cohesion and the effectiveness of its political process. He put on the national table an issue that is now attracting the interest of an increasing number of economists: Inequality is MOREJan 29, 2014 10:16 AM ET
The U.S. workforce is shrinking, but that's not because Americans in their prime working years are dropping out.
FORTUNE -- Where have all the workers gone?
The U.S. labor force has dropped by six million. Workers began to disappear during the Great Recession, but it has continued even after the economy has improved. So what's going on?
One answer is demographics. Back in 2006, a paper from a number of Fed economists, predicted MOREStephen Gandel, senior editor - Jan 14, 2014 5:00 AM ET
Markets should welcome the end of the Federal Reserve's stimulus.
By Sanjay Sanghoee
FORTUNE -- The U.S. Federal Reserve is one of the most powerful bodies on the planet today, able to shake global markets with the force of a single word: taper. Analysts shudder, investors wail, bond yields spike, and stocks collapse whenever the mere possibility of a taper arises. And yet, the fear that the world will end if MOREDec 17, 2013 9:01 AM ET
November's jobs report shows the U.S. created slightly more middle-wage jobs and a bit fewer lower-wage gigs. But we're certainly not out of the woods yet.Nin-Hai Tseng, Writer - Dec 6, 2013 1:18 PM ET
It's great news for Main Street. Will it be just as good for Wall Street?
By Mohamed A. El-Erian
FORTUNE -- This morning's U.S. employment report is an unusually good one -- in terms of the headline numbers and virtually all of the key components.
Net monthly job creation came in at 203,000, above consensus expectations of 180,000. Importantly, the job additions were broad-based, with virtually all sectors benefiting.
The widely followed unemployment MOREDec 6, 2013 10:30 AM ET
We're driving less, and that may not necessarily be a good sign for the economy.
FORTUNE -- U.S. gas prices are declining, falling below $3 a gallon across a handful of states. Not surprisingly, most are taking the drop as goods news, since less money spent at the pump leaves more money to spend elsewhere. That's one way to look at it, but often when gas prices drop steadily, that also MORENin-Hai Tseng, Writer - Nov 12, 2013 9:53 AM ET
Anyone who thinks October's better-than-expected jobs report will make the central bank taper sooner is ignoring the mess in Washington.
FORTUNE -- The monthly jobs report released Friday was better than expected, but anyone who thinks this means the Federal Reserve will start slowing down its economic stimulus program is probably overlooking Washington's dysfunction.
Recall in October, Uncle Sam was forced to partially shut down its offices and services after Congress stalled MORENin-Hai Tseng, Writer - Nov 8, 2013 11:22 AM ET
|The Deep Web you don't know about|
|Pizza chain Sbarro files for bankruptcy|
|Colorado gets $2 million from marijuana taxes|
|Invest $1 million, try for a U.S. green card|
|Shodan: The scariest search engine on the Internet|