Economy continued strong jobs growth in February

McClatchy NewspapersMarch 9, 2012 

WASHINGTON — The government reported Friday a second straight month of strong employment growth in February, with new jobs spread broadly across many sectors, which underscores that the nation's economic recovery is gathering steam and raises hopes for stronger hiring in coming months.

The private sector actually added 233,000 jobs in February, the Labor Department said, but the net gain was dragged down by the loss of 6,000 more government jobs. Government shed an average of 22,000 jobs per month in 2011, so that negative trend is weakening.

The jobless rate held steady at 8.3 percent, the lowest it's been in three years, and a closely watched measure of under-employment improved to 14.9 percent, the lowest it's been in three years.

The Bureau of Labor Statistics revised January's original job growth total up by 41,000, showing that payrolls actually grew by about 285,000 that month. Together, the new data point to a steadily firming job market, which confirms a series of 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."

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. Normally, an increase in hiring would knock down the unemployment rate, but more people started looking for paychecks, as the labor force participation rate shot up by two-tenths of a percentage point to 63.9 percent.

The strong job numbers were good news for President Barack Obama's re-election hopes. Speaking after touring a Rolls-Royce airplane engine plant outside Richmond, Va., he touted the 31,000 new manufacturing jobs added in February.

"More companies are bringing jobs back and investing in America, and manufacturing is adding jobs for the first time since the 1990s," the president said, flanked by workers in a camera-friendly event. "We just had another good month last month in terms of adding manufacturing jobs, and this facility is part of the evidence of what's going on all across the country."

Manufacturing remains a standout and appears likely to expand more soon.

"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)," forecaster RDQ Economics said in a note to clients.

The National Association of Manufacturers was upbeat about Friday's report.

"While total nonfarm payroll and manufacturing employment grew somewhat below the gains of January, the job gains of the past three or four months have been impressive," Chad Moutray, the group's chief economist, wrote in his blog.

Strong growth also appeared in professional and business services, which added 82,000 jobs. These tend to be better-paying, white-collar jobs, which tend to spread across the economy. However, more than half of these — 45,200 — were temporary jobs, which nonetheless is often a step toward becoming a full-time worker.

Leisure and travel added 44,000 jobs, suggesting that employers are loosening purse strings and letting employees travel more.

The always robust health care sector notched another 49,000 new hires.

On a down note, retailers shed 7,400 jobs during the month, usually a slow one for the sector. The hard-hit construction sector lost 13,000 jobs after two months of gains.

"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," RDQ wrote. "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."

Some saw Friday's numbers as unsustainable.

"We view the last few months of numbers above 200,000 as being the catch-up or bounce-back from what occurred during the recession fears last fall," said Michael Dueker, chief economist for Russell Investments. "Our view going forward is that hiring will go back under 200,000 (monthly) for most of 2012."

Bank of America economist Neil Dutta was more bearish.

"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."

The nation's overall employment number remains well below its pre-recession level. 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," said Heidi Shierholz, a labor economist with the liberal Economic Policy Institute. "Even at the quite strong average growth rate of the last three months (245,000 jobs added per month,) it would take roughly five years to get back to full employment in the labor market."

Still, Zandi of Moody's Analytics found reason for optimism.

"Layoffs are about as low as they have ever been and hiring is just starting to kick in. Businesses are profitable, their balance sheets are strong, and they are beginning to look for growth opportunities," he said. "This means more jobs."

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.

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