Employers shrugged off horrible winter weather to add a better-than-expected 175,000 jobs in February, even as the unemployment rate ticked up, the government said Friday in a report that snapped a losing streak.
Mainstream economists worried that the protracted cold snap and heavy snow in unusual places could hurt hiring, and estimated job creation in the range of 150,000 for February after a dismal prior two months.
Instead, hiring was stronger than anticipated given the seasonal factors and led by the white-collar professional and business services sector, which added 79,000 jobs last month. Temporary employment, usually a harbinger of future full-time hiring, also added almost 25,000 jobs last month.
“All around a solid employment report for the month of February that bodes well for better job and income growth in the months ahead,” said Scott Anderson, chief economist for San Francisco-based Bank of the West.
The Labor Department also revised upwards by a combined 25,000 jobs its estimates for December and January hiring, pushing them up respectively to 129,000 and 84,000. Those are subpar numbers, and one reason why February’s bounce back despite seasonal challenges was important.
In a year with mid-term elections, a return to jobs numbers that approximate the recent acceleration of the economy was welcome news for the White House.
“This is almost identical to the pace of job gains over the preceding twelve-month period (182,000 a month),” Jason Furman, chief of the White House Council of Economic Advisers, said in his blog.
House Speaker John Boehner, R-Ohio, looked past the February number.
“While it’s good news that more Americans found work last month, there are still far too many asking the question, ‘Where are the jobs?’ They have been waiting more than five years for an answer,” Boehner said in a statement shortly after the report’s release.
While not indicative of a blazing recovery, Friday’s numbers, in the face of a bad-weather month, pointed to an economy continuing to gain steam.
What has Anderson and other economists upbeat is a much larger than normal increase in average hourly earnings, almost half a percentage point. That’s a year-over-year gain of 2.2 percent, suggesting less slack in the labor market and that workers might begin commanding greater wages.
Wages have been unusually flat since the end of the Great Recession as the supply of workers far exceeded the demand for them from employers. That gap seems to be narrowing and Anderson said if continued it would be “a positive signal that a lower unemployment rate could begin to boost wages and incomes for American households.”
Most economists had expected a weaker number because of the tough weather. Federal Reserve Chair Janet Yellen, testifying before Congress last week, said she thought the weather has hurt economic growth but cautioned it was hard to say by how much.
The White House suggested the jobs report would have been even better had the weather not weighed so heavily.
“Specifically, 6.9 million nonagricultural workers that usually work full-time reported working part-time (less than 35 hours) during the survey reference week due to the bad weather, the second most in any month over the past 20 years,” Furman said on his blog. “Another 600,000 nonagricultural workers reported missing work for the entire week due to bad weather, more than twice as many as last February.”
The nasty weather weighed on shipments of manufactured goods in February and earlier, said Chad Moutray, chief economist for the National Association of Manufacturers.
“This data has been consistent with other economic releases of late that have shown more sluggish demand, production, and shipments due mainly to winter weather-related slowdown,” he said, adding that the “silver lining with weather-related influences, of course, is that warmer temperatures should bring improved job growth, and these data appear to support that view.”
Manufacturers added just 6,000 jobs in February, slow for the labor-intensive sector. The construction sector shrugged off the cold snap and added 15,000 jobs last month, and the leisure and hospitality sector posted 25,000 jobs suggesting expectations for more Americans traveling this spring.
Retailers shed more than 4,000 jobs last month, and the transportation and warehousing sector too was a job loser for February, down about 3,600 jobs. Healthcare added almost 10,000 jobs, a flat number for a dynamic sector.
Given the harsh winter, many economists have pulled back on their growth forecast for the first-three months of 2014. The economy posted a sizzling 4.1 percent rate of annual growth in the third quarter of 2013, followed by a sharply slower 2.4 percent in the final three months of last year. Few economists think the first three months of this year will the last three months.
The better-that-expected Friday report is also expected to keep the Federal Reserve tapering back its controversial purchases of government and mortgage bonds in support of the economy.
The Fed continues to purchase $65 billion a month in these bonds, but has ratcheted back its purchases by $10 billion in each of the first two months of 2014, and may knock it back to $55 billion a month after the rate-setting Federal Open Market Committee meets on March 18-19.
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