Big Jump in Private Jobs Bolsters Recovery Hopes
The economic waiting game may soon be over, as businesses signal that they are finally willing to resume widespread hiring.
In all, the nation added 192,000 jobs in February, a big jump from the 63,000 added the previous month, the Labor Department reported on Friday.
The job growth was the most in nearly a year, and the 12th consecutive month of gains by companies, which added 222,000 workers last month. It followed an unusually weak report in January, when major snowstorms across the country prompted offices and factories to close.
Taken together, the first two months of the year produced growth at about the same pace as last fall.
Economists say they are hopeful the pace will soon pick up further.
"Economic recoveries can be like a snowball rolling down a hill, in that it takes time to get some momentum," said John Ryding, chief economist at RDQ Economics. "People hesitate until they feel that the recovery's durable enough, and then they have a tendency to jump in. Maybe we're finally getting to that jumping-in moment."
Threats to a more robust recovery remain, of course, including a surge in energy and food prices, with the possibility of disruptions in oil production in the Middle East continuing to weigh on the financial markets. State and local governments are also shedding jobs, which depressed the total for February, as they grapple with budget woes.
But for now, the improvement is notable. The unemployment rate ticked down to 8.9 percent last month, falling below 9 percent for the first time in nearly two years. This rate, which comes from a survey separate from the payroll numbers and is based on the total number of Americans who want to work, has remained stubbornly high the last year. Altogether, 13.7 million people are still out of work and actively looking.
Economists say the unemployment rate could rise temporarily in the next few months, as stronger job growth lures some discouraged workers to look for jobs again. Right now, just 64.2 percent of adults are actively involved in the work force, meaning they are either in a job or actively looking for one. That is the lowest participation rate in 25 years, an indication that many Americans are either staying home, going back to school, raising children or otherwise waiting for better conditions before applying for work.
"It's a puzzle, a genuine puzzle why that number has been stuck," a senior economist at Credit Suisse, Jay Feldman, said. "I expect it to recover somewhat in the coming months as the labor market improves and more people become encouraged about their job prospects."
Other recent economic reports — like those on unemployment claims and manufacturing — have pointed to stronger demand for workers. The Federal Reserve, in a survey of its 12 districts, noted on Wednesday that the labor market had improved modestly, but the Fed chairman, Ben S. Bernanke, told lawmakers that "until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established."
The unemployment rate has fallen from a peak of 10.1 percent in this downturn. A broad measure of unemployment, which includes people working part time because they cannot find full-time jobs and those so discouraged that they have given up searching, dipped to 15.9 percent in February, from 16.1 percent in January.
Job gains appeared in nearly every industry last month. Among the biggest winners were the manufacturing, construction, and professional and business services industries. Construction payrolls bounced back from a very low level in January, when severe snowstorms hindered activity.
"In some cases it's very hard to judge how big the underlying improvement there is in this data," said Nigel Gault, chief United States economist at IHS Global Insight.
State and local governments, squeezed by revenue shortfalls and a reluctance to raise taxes, again laid off workers. Local governments have eliminated 377,000 jobs since September 2008, when their employment last peaked.
"There's no work out here," said Julio Santiago, 33, a mechanic who repaired police cars and sanitation trucks for the city of Newark before he was let go last November.
He and his wife, who has been job-hunting for two years, have canceled their children's summer camp plans, cut out cable and Internet, borrowed from friends and even given away the family dog to make ends meet.
"The only work they have is only temporary work, or one or two days a week, and I can't afford to do that," Mr. Santiago said. "Plus they told me they may cut my unemployment benefits if I take those jobs, even if they know I'm only getting to work a few hours a week."
Federal payrolls were unchanged in February, but federal employees may also be at risk of significant layoffs if Republican leaders in Congress are successful with their proposed budget cuts. Economists at Goldman Sachs and elsewhere have warned that such budget cuts could ripple through the economy and lead to layoffs in the private sector. "I am optimistic we can get to a bipartisan budget agreement, whereby the government is on a path to staying within its means without derailing the recovery and slowing the job creation engine," said Austan Goolsbee, chairman of President Obama's Council of Economic Advisers. "What we cut, and how, matters."
Rising prices for energy and food also remain a risk to job growth, economists say, as they leave less money for consumers and businesses to spend on other purchases that could potentially spur hiring.
The contract for future delivery of light sweet crude oil rose to $104.42 a barrel on Friday, an increase of nearly $7 for the week, depressing the major stock indexes, which were down less than 1 percent on the day.
Many economists forecast that job growth will pick up later this year to a rate of more than 200,000 a month. While that would be a welcome development compared with the modest growth in January and the bloodletting during the recession, it still is not fast enough to recover much of the ground lost.
Since the downturn began in December 2007, the economy has shed 7.5 million jobs, or about 5.4 percent of its nonfarm payrolls. If the country adds 200,000 jobs every month, it would take more than three years to return to the employment level before the recession. And that does not take into account the fact that the working-age population has continued to grow — meaning that if the economy were healthy, it would have more jobs today than before the recession.
While gains by industry have been relatively widespread, the benefits to workers themselves have not been as universal. Workers who have already been unemployed for months or even years, for example, have had trouble getting employers to consider them. As a result, even though those out of work a few weeks have gotten new jobs, the average duration of unemployment has climbed to the unusually high level of 37.1 weeks. Many of these long-term unemployed are older workers who are considering giving up and could permanently leave the job market.
Men and women have also been affected differently by the recovery.
While men bore the brunt of job losses in the recession, requiring more women to serve as their family breadwinners, that has since changed. In the last year the share of men with jobs has risen and the share of women with jobs has fallen. In fact, the portion of women working declined to 53.2 percent in February, the lowest share since 1988.