WASHINGTON — A better-than-expected jobs report from the Labor Department on Friday added to a list of indicators that the U.S. economy is healing, but employment growth strong enough to reduce the jobless rate remains months away.
News that the unemployment rate held steady at 9.7 percent and employers shed only 36,000 jobs on net in February came as a relatively pleasant surprise. Analysts had expected much worse owing to the miserable winter weather across much of the nation last month.
"Now, this is actually better than expected, considering the severe storms all along the East Coast are estimated to have had a depressing effect on the numbers. And it shows that the measures that we're taking to turn our economy around are having some impact," President Barack Obama said of the job numbers. "But even though it's better than expected, it's more than we should tolerate."
On balance, Friday's data point to a transition that's under way from employers shedding jobs to what the Obama administration hopes will be a steady net gain in jobs starting this month.
Some private analysts expect that to happen.
"We have to conclude that this is a fairly strong employment report and that we will see a significant increase in employment and hours worked in the March release," forecaster RDQ Economics said Friday in a research note.
"The job market will look much better this spring as the Census (Bureau) ramps up hiring for the 2010 census. Several hundred thousand temp jobs will be created between March and May. The real test for the job market will come this summer and fall when the census temp jobs end," said Mark Zandi, the chief economist for forecaster Moody's Economy.Com. "If private businesses haven't begun to hire by that time, then the job market will weaken again."
While Friday's headline numbers remained slightly negative, the report offered some mildly positive signs. Manufacturers added jobs for the second straight month, albeit not many, around 1,000.
"Of the 21 manufacturing industries, more than half (13) reported modest gains, totaling 19,300 jobs. These increases were largely offset by declines in seven industries, led by motor vehicle employment," David Huether, the chief economist for the National Association of Manufacturers, wrote Friday in his blog Shopfloor. "Given the underwhelming report earlier this week on January factory orders, a more robust upturn in manufacturing output and employment in the coming few months is not likely in the cards."
More comforting was the services sector, which added 42,000 jobs, and professional and business services employment, which increased by 51,000. This shows momentum building in a vital sector.
On the downside, 64,000 construction jobs were lost, and 60,000 jobs tied to goods production. Government employment was down 18,000 as revenue-strained state and local governments stepped up layoffs.
The Associated General Contractors of America, a trade group for builders, said Friday that the unemployment rate for construction workers rose to 27.1 percent last month, compared with a 21.4 percent jobless rate 12 months before.
The Bureau of Labor Statistics revised its December numbers: 109,000 jobs were lost that month, not 150,000 as first reported. The BLS also revised January's data to show that 26,000 jobs were lost, not the 20,000 initially reported.
The slowly improving jobs picture follows other recent positive signs, including indices in manufacturing and services that show economic expansion and rising retail sales.
"The bottom line is that the recession is over and a recovery has begun, but a self-sustaining economic expansion has yet to take hold. The missing link is hiring," Zandi said. "Until businesses hire, it is hard to conclude that the economic coast is clear."
Economists were surprised that the unemployment rate held steady at 9.7 percent. It had been expected to rise as workers who'd given up searching for jobs began trying again.
"Many had expected that some of January's 0.3 percentage point decline would prove to be a transitory drop. That it was maintained for a second month makes it more likely that it was a genuine decline, not statistical noise," Christina Romer, the head of the White House Council of Economic Advisers, said in a statement. "The number of workers unemployed for more than 26 weeks fell by 180,000, the first decline in over a year."
Other evidence suggested that hiring is picking up.
Surveys of U.S households showed that 308,000 more Americans reported that they were employed in February compared with a month earlier. Likewise, the number of people who reported themselves as not in the labor market fell by 167,000 last month.
However, some of what households reported cast doubt on how firm the emerging recovery is. For example, the number of people who reported that they're working part time for economic reasons rose by 475,000 last month, and those who said they're working part time because of slack business conditions increased by 312,000.
"The report today shows a labor market with no momentum, though the snowstorms' impact creates some uncertainty. The good news is the unemployment rate is not returning to the 10.1 percent level of October," said Larry Mishel, the president of the Economic Policy Institute, a liberal economic-policy research group. "The bad news is that employment is not growing, and even a generous interpretation of the snow's impact suggests the underlying trend is insufficient to be driving down unemployment in the near future. Also disappointing is that wage growth remains minimal."
FEBRUARY BY THE NUMBERS — Construction, down 64,000.
— Goods-production, down 60,000.
—Services, up 42,000.
— Leisure and hospitality, up 7,000.
—Manufacturing, up 1,000.
— Health care, up 12,100.
—Government, down 18,000.
— Retail, unchanged.
— Transportation, warehousing, down 12,000.
— Professional, business services, up 51,000.
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