Analysis: Report shows economy’s strengths
Analysis: A warning for investors
The consensus forecast of economists had estimated the economy added about 160,000 jobs in February.
Businesses added 246,000 jobs, while federal, state and local governments cut 10,000. Professional and business services, construction and health care led broad-based job gains.
The Labor Department revised down job gains for December and January by 15,000. December’s net payroll jobs were revised up to 219,000 from 196,000, while January’s were revised down to 119,000 from 157,000.
Some economists had been looking for strong gains after a report Thursday showed the number of Americans applying for unemployment benefits for the first time fell 7,000 to 340,000 in the latest week, and the four-week average of claims dipped to the lowest level in five years. Also, private payroll processor ADP estimated that businesses added 198,000 jobs last month.
Monthly job gains of 200,000 or more are typically needed to quickly bring down the unemployment rate. Job growth picked up last year to an average monthly pace of 181,000.
“We’re slowly and steadily accelerating,” says economist Joel Naroff of Naroff Economic Advisors. “The private side of the economy is in good shape. It’s the public sector that’s holding up” even stronger payroll growth.
Naroff expects average monthly job gains of 200,000-plus this year if the White House and Congress can agree to put off the budget cuts. If all the reductions occur, it likely would mean monthly gains of about 165,000, he says.
Business sentiment remains mixed amid the uncertainty in Washington. Thirty-three percent of executives plan to grow their staffs this year, 38% plan to reduce them and 29% expect no change, according to a first-quarter survey released this week by business consulting firm CEB.
In February, a broader gauge of distress in the job market — the underemployment rate — which includes discouraged Americans who have stopped looking for work and part-time workers who want full-time jobs, also fell to 14.3% from 14.4%.
Other signals were positive, too. The average workweek edged up to 34.5 hours from 34.4 hours in January. Employers often increase hours for existing employees before hiring. And average hourly earnings rose 4 cents to $23.82
Employers added 16,000 temporary workers. They typically add contingent workers before bringing on more permanent staff.
Less encouraging was an increase in the number of Americans out of work at least six months; that number rose to 4.8 million from 4.7 million. They now make up 40.2% of all those unemployed.
Professional and business services led job gains, with 73,000. Construction added 48,000 jobs and has added 151,000 since September on the housing-industry rebound. Health care added 39,000 jobs.
Leisure and hospitality, meanwhile, added 24,000 and manufacturers added 14,000.
Some economists still expect payroll additions this year could be slowed by Washington’s recent failure to renew a payroll tax cut, plus $85 billion in across-the-board federal spending cuts that started to take effect March 1.
But the economy has proved resilient so far. Measures of manufacturing and service-sector activity both showed growth in February.
And the housing rebound is sparking job gains in a range of industries, from construction to furniture sales and mortgage lending. Rising home and stock prices are making consumers feel wealthier, helping offset the effects of the payroll tax increase and higher gasoline prices.