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February’s rising unemployment rate is actually a positive sign, economists say

Lily Jamali Mar 10, 2023
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"People think this is a good time to be searching for a job," said Gus Faucher of PNC Financial Services Group. Spencer Platt/Getty Images

February’s rising unemployment rate is actually a positive sign, economists say

Lily Jamali Mar 10, 2023
Heard on:
"People think this is a good time to be searching for a job," said Gus Faucher of PNC Financial Services Group. Spencer Platt/Getty Images
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The February jobs report out on Friday showed the unemployment rate rising — albeit slightly — to 3.6% from 3.4%. At the same time, the labor force grew in February by 419,000 people.

All those Americans joining the labor market have economists thinking that the rising unemployment rate may be a potentially positive sign for the economy.

A combination of factors can push the unemployment rate higher, said EY-Parthenon Chief Economist Greg Daco.

“It can be that employment actually declined or it can be that more people are looking for employment,” he said.

What stands out in today’s jobs report is how many Americans — 242,000 — are in that second category.

Growth in the number of people looking for work means the unemployment rate is rising for the right reasons, according to Elise Gould, senior economist at the Economic Policy Institute.

“More of them did not find jobs than found jobs, but that sort of optimism, I think, is a positive move for the labor market,” Gould said.

But she added that the trends are playing out differently across demographic groups. Take the group the government classifies as Hispanic or Latino men, said Kate Bahn, chief economist at the Washington Center for Equitable Growth.

They make up more than half the growth in labor force participation — but aren’t being employed at the same rate as other groups.

“At least in the past few months, Hispanic men among all groups of workers have not been able to capture the gains of a tight labor market,” Bahn said.

The Bureau of Labor Statistics said that 37,000 Hispanic or Latino men lost jobs in the last month.

Still, this month’s data points to a strong labor market overall, said Gus Faucher, chief economist at PNC Financial Services Group.

“People think this is a good time to be searching for a job,” he said.

Policymakers at the Federal Reserve will be watching to see if that sentiment lasts, Faucher added.

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