Unemployment fell in 29 states in February due to about 2/3 of states reporting job gains. The decline in unemployment occurred despite last month's nationwide rise to 6.7% from 6.6%. This rise can be explained by an increase in the labor force, as more people began looking for jobs. Frictional unemployment occurred because it takes time for people to find jobs, causing the increase in unemployment.
Following two months of below average job creation (December- 84,000 and January- 129,000), 175,000 jobs were added in February. The terrible winter weather was likely the reason for the slowing in December and January.
The biggest drop in unemployment occurred in South Carolina, where the rate fell from 6.4% to 5.7%. However, South Carolina actually lost jobs in February. How can this be possible? Many unemployed people in the state stopped looking for jobs. In order to be considered unemployed, a person must be actively seeking employment. This means a sharp decline in the number of unemployed people, explaining the fall in the unemployment rate. Ohio had the second largest drop in unemployment, falling from 6.9% to 6.5%.
It will be interesting to see what the unemployment rate is for March... Will people start looking for jobs again in South Carolina and other states which would make the unemployment rate more indicative of market conditions OR will it stay the same and be artificially low.
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