February jobs report adds to January sizzler

Mar. 09, 2012
February jobs report adds to January sizzler
Kevin G. Hall | McClatchy Newspapers

WASHINGTON — Employers added a better-than-expected 227,000 jobs in February, but the unemployment rate held steady at 8.3 percent as more workers returned to the labor force, the Labor Department said Friday.

Most mainstream economists were projecting about 200,000 new jobs for last month, but the Bureau of Labor Statistics reported that 233,000 private-sector jobs were created during the month. That number was dragged down by the 6,000 additional government jobs lost during February.

In line with the strengthening employment numbers, the agency revised upwards January’s original projection by 41,000, meaning payrolls actually grew by about 285,000 in January. It all points to a job market getting its legs underneath it and is in line with a number of other positive economic indicators.

“February was another very good month for the job market. The economy is consistently creating 200,000 per month across a widening range of industries and regions of the country,” said Mark Zandi, chief economist for forecaster Moody’s Analytics.

“While job growth will likely slow a bit this spring as the weather becomes more seasonable, job growth is strong enough to push unemployment lower. All of the leading indicators for job growth in coming months are positive.”

Normally, an increase in hiring would knock down the unemployment rate, but the labor force participation rate shot up by two-tenths of a percentage point to 63.9 percent. This suggests that some workers who had exited the workforce are returning to seek work, but it isn’t raising the jobless rate, as some had predicted.

Alan Krueger, head of the White House Council of Economic Advisers, offered another explanation.

“There was an increase in the size of the labor force last month of 476,000. Importantly, the increase in the labor force last month was due in large part to a reduction in the number of workers who exited the labor force between January and February,” Krueger said in a statement on the jobs numbers.

Whatever the reason, February marked the first time in six months that the unemployment rate did not fall. It has fallen eight-tenths of a percentage point over the past half year.

Economists welcomed Friday’s jobs report because its gains were spread widely across sectors.

“The employment gains appeared broad-based with manufacturing and business services showing particularly encouraging gains in the context of looking for clues about the underlying health of the expansion,” wrote forecaster RDQ Economics, in a note to investors. “The gain in hours worked in the first two months of the year put the first quarter on track to be the strongest thus far in the recovery."

Manufacturers added 31,000 jobs in February, but it wasn’t the only indicator of robust manufacturing.

“Perhaps the best sign of strength is the double-digit increase in hours worked in manufacturing over the last three months (with the likelihood of another solid gain in manufactured output in February),” RDQ said.

One of the most encouraging numbers within the February report was 82,000 new jobs in professional and business services. These tend to be better paying, white-collar jobs, which tend to have a multiplier effect in new spending in the economy. However, more than half of these hires — 45,200 — were temporary employment, which nonetheless is often a step before becoming a full-time worker.

Leisure and travel as a sector added 44,000 jobs during the month, suggesting employers are loosening the purse strings and letting employees travel more. And the always robust healthcare sector notched another 49,000 new hires for the month.

On a down note, retailers shed 7,400 jobs during the month, usually a slow one for the sector. And the hard hit construction sector took it on the chin again, losing 13,000.

Bank of America economist Neil Dutta has been more bearish than most colleagues, and in a note to investors Friday warned that there may be less to the numbers than appears.

“We have argued the recent improvement in economic data has been a function of three factors: weather, a delay in the foreclosure process, and the lagged impact of lower gasoline prices. Today's employment report falls into this tailwind period,” he wrote. “Weather related effects will not be a tailwind as the winter thaws to spring. Gas prices have since risen at a time when they typically decline or stay flat. And, finally, foreclosures are likely to accelerate in the aftermath of the recent (attorneys general) settlement. As a result, we remain cautious on the near-term data flow and continue to expect a more mixed economic data backdrop in coming months.”

As encouraging as the jobs numbers have been in recent months, the overall number remains well below its pre-recession level and it will continue to be a long slog back. The economy has recovered about 3.5 million jobs of the 8.7 million lost during the Great Recession.

“We have 5.3 million fewer jobs now than we did before the recession started, and we should also have added around 4.6 million jobs over this period just to keep up with normal growth in the working-age population,” Heidi Shierholz, a labor economist with the liberal Economic Policy Institute, said in a commentary on the jobs numbers. “Even at the quite strong average growth rate of the last three months (245,000 jobs added per month,) it would take roughly 5 years to get back to full employment in the labor market.”

FEBRUARY BY THE NUMBERS:

— Professional and business services, up 82,000.

— Manufacturing, up 31,000.

— Leisure and hospitality, up 44,000.

— Health care, up 49,000

— Construction, down 13,000. — Temporary help services, up 45,200.

—Transportation and warehousing, up 10,600.

— Retail, down 7,400.

— Financial services, up 6,000.

— Government jobs, down 6,000.

ON THE WEB BLS report
http://www.bls.gov/news.release/empsit.t17.htm

Employment by sector
http://www.bls.gov/news.release/empsit.t17.htm