Labor Market Conditions Index Falls

The labor market conditions index, which is a broad composite of 19 separate indicators, fell back to minus 2.4 in February vs a downward revised minus 0.8 percent in January. Strength tied to payroll growth or the gain in the labor force participation rate are being offset by February's drop in average hourly earnings and the decline in temporary help payrolls as well as declines in non-government data such as the jobs-hard-to-get subcomponent of the consumer confidence report or the jobs-hard-to-fill component of the small business optimism index. These results are a surprise and offer a different look at the labor market, one that would confirm expectations for no action at next week's FOMC meeting.