U.S. employers added more jobs than forecast in February and the unemployment rate declined, suggesting the labor market is clawing its way forward again following several disappointing months.
Payrolls increased 379,000 after an upwardly revised 166,000 January increase, according to a Labor Department report Friday. Economists in a Bloomberg survey projected a 200,000 February gain. The unemployment rate dropped to 6.2%.
A decline in Covid-19 cases, along with an easing of business restrictions in some states, is starting to result in more hiring even as millions of Americans remain unemployed. February job growth was propelled by a 355,000 surge in leisure and hospitality employment, an industry hardest-hit by the pandemic and key to a broader recovery in the labor market.
“The core story here is that the re-opening of services will be the dominant factor in the payroll numbers over the next few months,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note. In March, job growth “could easily see a 1 million” gain in employment, unless there’s a renewed surge in infections, he said.
The report adds to recent evidence, including data on manufacturing and retail sales, that the economy is gaining momentum. High-frequency data have also shown additional improvement, including an uptick in restaurant bookings.
The yield on the 10-year Treasury note advanced to the highest in more than a year following the report, while U.S. stocks advanced in early trading and the dollar rose.
Many economists expect to see job prospects, and economic growth, improve in the coming months as vaccinations pick up and virus concerns ease further.
Policy makers are closely monitoring the labor market as they consider a another economic stimulus bill. President Joe Biden’s $1.9 trillion relief package — which includes an extension of federal unemployment benefits — passed the House of Representatives on Saturday and the Senate’s final vote is expected as soon as this weekend.
Federal Reserve Chair Jerome Powell said in a webinar on Thursday that the labor market is still a long way from maximum employment but that “there’s good reason to expect job creation to pick up in the coming months.”
“We want to see that the gains in employment are broad-based,” Powell said. “We have a high standard for defining what maximum employment is and we think it will take some time to get there.”
There were nearly 10 million unemployed Americans in February, almost double the pre-pandemic level, underscoring a lengthy road to recovery for the labor market. Other areas of the economy, including housing and manufacturing, have recovered much more quickly.
Private payrolls rose by 465,000 last month, which included job gains in food services, retail, health care and manufacturing, after rising 90,000 in January. The 286,000 increase in employment at restaurants was the largest since July.
Government jobs, meanwhile, declined by 86,000 in February, largely reflecting cutbacks in state and local education.
While the report also showed a decline in hours worked, inclement winter weather likely played a role. Frigid weather in early February limited work weeks throughout major industries, though the impact of widespread blackouts in Texas occurred after the survey period for the jobs report closed.
What Bloomberg Economics Says…
“Evidence pointing to a significant winter weather impact suggests that an even stronger outcome would have occurred, were it not for outbreaks of severe cold and snow across much of the country last month.”
— Carl Riccadonna, Eliza Winger and Andrew Husby, economists
For the full note, click here
The jobs report also showed the number of Americans without work for 27 weeks or longer, known as long-term unemployed, rose to 4.15 million, the highest since August 2013 and a sign of scarring for the labor market and broader economy.
- The U-6 unemployment rate, which is considered a more accurate measure of joblessness by some economists, held at 11.1%. Unlike the headline unemployment rate, the U-6 rate includes those who are employed part-time for economic reasons and those who have stopped looking for a job because they are discouraged
- Average hourly earnings increased 0.2% from January and 5.3% from February 2020
- The unemployment rate for Black Americans rose in February, while falling for White, Asian and Hispanic Americans
- The jobless rate decreased for both women and men
–With assistance from Kristy Scheuble, Sophie Caronello and Liz Capo McCormick.