US unemployment rate drops to 8.9%, 192,000 new jobs created in February
The missing piece of the U.S. economic recovery – job creation – is finally falling into place.
Employers added 192,000 jobs in February, the Labor Department said Friday, and the unemployment rate edged down to 8.9 percent from 9 percent, marking the third straight month of decline.
The jobs report was the most promising since the recession began more than three years ago and the most solid evidence yet that the recovery is gaining momentum.
While the job numbers received a boost from people returning to work after being marooned at home during the January snowstorms, economists and executives see the new data as confirmation of an underlying trend that had been visible anecdotally and in various other surveys: Private employers are gaining confidence and beginning to hire.
“I’m glad to finally see a labor report that is more reflective of what we’ve been seeing in the job market,” said Tig Gilliam, chief executive of the employment services firm Adecco North America. “The economic recovery is finally on track.”
The Obama administration cited the report as evidence that its policies, including the recently enacted payroll tax holiday and business investment tax break, are helping the nation claw out of its deep recession. “This is a very solid report,” Austan Goolsbee, the president’s chief economist, said in an interview. “You don’t want to conclude too much from any given month, but this does appear to be the culmination of what has been a trend.”
Republican leaders said it was the extension of the George W. Bush tax cuts that set the stage for progress. Republicans had demanded that the cuts be extended for all taxpayers, not just those earning less than $250,000 as President Obama preferred.
“The improvement seen in this report is a credit to the hard work of the American people and their success in stopping the tax hikes that were due to hit our economy on January 1,” House Speaker John A. Boehner (R-Ohio) said in a statement. “Removing the uncertainty caused by those looming tax hikes provided much-needed relief for private-sector job creators in America.”
Despite the strong jobs report, the U.S. stock market declined on the day, partly because of investor anxiety over higher oil prices, a product of the turbulence in the Middle East. The Standard & Poor’s 500-stock index closed down 0.7 percent, while the price of oil rose 2.5 percent. Political turmoil in the Arab world is one of the main factors that could still reverse the economic recovery reflected in the employment report.
The unemployment rate has now declined nearly a full percentage point since November, the steepest drop over a three-month span since 1983.
Many analysts had viewed the rapid decline in the unemployment rate in December and January as too good to be true, expecting the February number to inch back up to 9.1 percent.
But the improved data come with caveats – and not just that the job gains perhaps partly reflected Americans’ return to work as the January ice melted.
At the current pace of improvement, it will still take years to put a sizable portion of the 13.7 million who are still unemployed back to work. And the ultimate barometer of the job market – the ratio of employed workers to the total U.S. population – did not budge, despite the stronger job creation.
Meanwhile, the proportion of the unemployed who have been out of work for more than six months actually edged up.
Also, wages appear stagnant. The length of the average workweek was unchanged, at 34.2 hours, and average hourly earnings of those who are working inched up only a penny to $22.87.
But overall, there was much more to like in the new numbers than dislike. A broad measure of joblessness – capturing people who are working part time but want full-time jobs and those who have given up looking for work out of frustration – also fell, to 15.9 percent from 16.1 percent.
And hiring in the private sector was strong and broad-based. Private employers added 222,000 jobs, partly offset by a loss of 30,000 state and local government jobs. With tax revenue down and federal stimulus payments waning, many states are cutting jobs to balance their budgets.
Every major sector of private industry except retail added positions. Manufacturers added 33,000 jobs; professional and business services firms added 47,000; and the health-care sector added 36,200. The long-suffering construction sector added 33,000.
Since late last year, the monthly reports had provided a muddied picture of the U.S. economy. But the quicker pace of job gains reported Friday now matches other encouraging measures of growth, such as surveys of businesses and weekly reports on unemployment insurance benefits.
“It’s a very fair representation of where the economy is,” said John Silvia, chief economist at Wells Fargo.
Source: The Washington Post