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An Alternative Look At U.S. Nonfarm Payrolls

January nonfarm payrolls came in above estimates, leading to an increased chance the Federal Reserve will raise its benchmark rate in coming months. It is important, however, to look closer at the specifics of the report to observe the true health of the U.S. labor market. In January, the nonfarm payrolls figure came in at 257,000 additional jobs, below the previous month's revised reading of 329,000, as well as exceeding estimates for 234,000.

When looking at nonfarm payrolls as a percentage of the total population, jobs are slowly being added. In January, nonfarm payrolls accounted for 43.96% of the population, up from a low of 42.39% in 2010, as is seen in the chart below. Payrolls are as high as they have been since 2010, but remain below the near 46% rate prior to the financial crisis, as well as the 47% rate in the late 1990's. Declines in the… Read More …