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PIMCO’s El-Erian: It’s a Good Unemployment Number

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The U.S. Bureau of Labor Statistics reported Friday that employment in the private sector rose by 227,000 in February, and the unemployment rate held steady at 8.3%.

The total came in above analysts’ consensus, which had estimated between 210,000 and 215,000 new jobs. On Wednesday, Payroll processor ADP predicted 216,000.

The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.4 million in February. These individuals accounted for 42.6% of the unemployed.

Both the labor force and employment rose in February. The civilian labor force participation rate, at 63.9%, and the employment-population ratio, at 58.6%, edged up over the month.

“It’s good number–not just the headline but also the revisions,” PIMCO CEO Mohamed El-Erian told Bloomberg Television Friday morning. “Also, the fact that the participation rate is going up and some of the structural elements are improving … Overall, a good report. Having said that, it’s just indicative of the healing process. We are not yet at escape velocity. We’re not yet in a place where the labor market and consumers can push this economy forward.”

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.1 million in February.

Employment for December was revised upward from 203,000 to 223,000, as was January from 243,000 to 284,000.

“We need to see hourly earnings increasing a lot more,” El-Erian said. “Yes, oil is a headwind. We must not forget that it’s a significant part of consumption. Unfortunately, we’re going to be at high oil prices because of all of the geopolitical concerns.”

“That’s why it goes back to, when you look at different components of demand, it’s difficult to identify the one that will cause this breakout,” he added. “It’s not going to be the rest of the world. They’re slowing. It’s not going to be the government. It’s not going to be the consumer. Could it be business? Yes. But business has to have better assurances that demand will ultimately go up, otherwise they do not invest.”


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