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By Jason Stipp | 03-04-2011 09:42 AM

Don't Be Disappointed with February's Job Data

Expectations soared a bit too high ahead of Friday's report, but the underlying data showed solid progress.

Jason Stipp: I'm Jason Stipp for Morningstar.

February's government employment report showed improvement over January's, with 192,000 jobs added to the economy. We also saw the unemployment rate tick down to 8.9%.

Here with me to dig into the details is Morningstar's Bob Johnson, director of economic analysis, and Vishnu Lekraj, he is an equity analyst covering the employment sector.

Thanks for being here guys.

Vishnu Lekraj: Thanks for having us.

Bob Johnson: Good to be here.

Stipp: So, Vishnu, as you were scanning the headlines this morning; how is the media spinning it? What kinds of headlines and how is it being received by folks?

Lekraj: Oh, it's very good news, because you'll see on the headlines the word "surge," you see "good upswing," "acceleration from January." You see the employment rate at a two-year low.

So those are some of the headlines when you scan them, which is very good news because that builds more confidence into the American psyche and helps the government and helps everyone start to get going in terms of creating jobs and pushing more stuff into the economy.

Stipp: Bob, one of the things that was cast as a disappointing note in some of the stories I read this morning was the actual number versus the expectations, and the expectations are kind of an interesting story. What have you seen the expectations doing over the last week?

Johnson: Well, it's funny, because we've been tracking this story, because last week when I wrote my piece, I pulled out the consensus number, and it was 172,000 was what today's report was supposed to be, and everybody would have been very happy with a number like that.

When we talked on Wednesday, we'd gotten the ADP number, which is another payroll service that reports job numbers, and after people saw that, their expectations got raised to 200,000.

Lo and behold, by Friday morning, when the number finally comes out, the consensus expectation is magically 218,000. So imagine, this [employment] number that would have been really fantastic a week ago [compared with consensus estimates] is suddenly a piece of garbage.

Stipp: Suddenly a disappointment according to the estimates.

Johnson: Exactly.

Stipp: There seemed to be quite a bit of optimism that got built into those over the last few days.

So, digging in a little bit, Vishnu, one of the things on the sector level that I thought was surprising was the construction number. We actually expected that that would go down. Can you tell me a little bit about what might have been behind that?

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