Economy adds 175,000 jobs, beating forecasts
The job market rebounded from a two-month slump in February as employers added 175,000 jobs, while the unemployment rate rose to 6.7% from 6.6%, the Labor Department said Friday. The report beat most expectations, pumping up stock futures ahead of the market’s opening bell. Economists surveyed by Action Economics estimated that 157,000 jobs were added last month. Businesses added 162,000 jobs, led by strong increases in professional and business services and education and health care. Federal, state and local governments added 13,000 jobs.
Employment gains for December and January were revised up by a total 25,000. December’s were revised to 84,000 from 75,000 and January’s to 129,000 from 113,000. Despite the solid payroll advances, the unemployment rate, which is derived from a different survey, ticked up in part because the labor force rose by 264,000, including previously discouraged workers who resumed their job searches. Several economists were encouraged that the job gains came despite continuing impacts on payrolls from unseasonably cold and stormy weather. The number of Americans who said they didn’t work because of bad weather during the period surveyed by the Labor Department rose sharply.
The economists expect a bounce-back effect in coming months as workers who stayed home because of weather the past three months return to their jobs and hiring picks up after being deferred during snowstorms. “This report suggests that the underlying momentum in the economy is solid and our feeling is that there is still a significant ‘catch-up’ payroll report lurking out there in the spring,” RDQ Economics said in a research note. The firm said the job gains are “likely more than enough” to prompt the Federal Reserve to continue to taper its bond-buying stimulus program at a March 18-19 meeting after weak economic data in recent months raised questions about a pullback.
Patrick O’Keefe, former deputy assistant secretary at Labor, is less bullish about the economy. He says other factors, including a slowing of the housing recovery and tepid consumer spending, contributed to soft employment gains in December and January. “The job market is limping faster,” said O’Keefe, who is now director of economic research for Cohn Reznick, an accounting and consulting firm.
Professional and business services led job gains with 79,000. Education and health services added 33,000, though health care added just 9,500 and continues to experience a slowdown as hospitals cut staff, partly in response to lower Medicare reimbursements and the Affordable Care Act. That sector had driven job growth even through the recession.
Leisure and hospitality added 25,000 jobs, and construction and wholesale trade each added 15,000. Manufacturers added just 6,000 at least in part because of the adverse weather.
Some other labor market indicators were mixed. The average workweek dipped to 34.2 hours from 34.3 hours, with the poor weather likely contributing to reduced hours. Average hourly earnings rose nine cents to $24.31.
The number of Americans out of work at least six months rose by 203,000 and those long-term unemployed make up 37% of all of those out of work.
A possible bright spot is that the number of temporary employees increased by 24,000. Companies typically bring on contingent workers before adding to permanent staff.
And a broader measure of distress in the job market that includes part-time employees who prefer full-time jobs and those who’ve given up looking for work, as well as the unemployed — dipped to 12.6% from 12.7%.
Source: USA Today