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Economy Adds 227,000 Jobs in February

2:25 PM, Mar 9, 2012   |    comments
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WASHINGTON -- Employers added 227,000 jobs in February, slightly more than expected and the third straight month of solid gains, as government layoffs slowed and payrolls rose sharply in professional and business services, health care and leisure and hospitality, the Labor Department said Friday.

The nation's unemployment rate, which is calculated from a different survey, was unchanged at 8.3%, as robust advances in household employment advances were offset by an equally strong increase in the labor force. The labor force increased by 476,000, with many discouraged workers who had given up the job search surging back into an improving labor market.

"Were getting a clear signal that people are becoming more confident they can find a job," says Joel Naroff of Naroff Economic Advisors.

That bodes well for President Barack Obama's re-election chances, although he's still likely to face the highest unemployment rate of any post-war president.The government also revised up job gains for December and January by total 61,000.

In a separate report out Friday, wholesale businesses increased stockpiles in January although sales fell for the first time in eight months, the Commerce Department said.

Inventories at the wholesale level increased 0.4% in January following an even larger 1.1% gain in December. Meantime, sales dipped a slight 0.1%, the first drop since a 0.3% fall last May. Sales had risen a solid 1.4% in December.

Business rebuilding of inventories has been a major driver in economic growth so far in the recovery. But economists believe inventory rebuilding will slow in the January-March quarter, a development expected to temporarily dampen growth.

Because of that anticipated slowdown, these economists expect the economy will see slower growth of around 2% in the first quarter. For the entire year, economists at JPMorgan are forecasting growth of 2.3%, which would be a modest improvement from the 1.7% growth turned in during 2011.

Even so, February's to 227,000 job gains exceeded estimates of 210,000 by a consensus of economists. The private sector added 233,000 jobs, more than the 220,000 anticipated, while governments cut 6,000.

Local governments added 2,000 jobs in a possible sign that a long-time drag on the job market could be easing. Naroff said state governments that have been cutting aid to localaties are shoring up their own budgets, allowing them to increase or maintain funding to cities and counties.

The job gains mark the third straight month of employment increases of 200,000 or more. Payrolls grew an average 245,000 past three months, up from 157,000 the prior three months and 88,000 the three months before that.

A similar three-month flurry of job gains of at least 200,000 occurred a year ago before the Japanese earthquake and rising gasoline prices stymied growth. This year, economists are similarly worried about higher gas prices and lingering European financial turmoil.

Some experts, however, believe the current run-up is more durable.

"This time, though, we think it's sustainable," Ian Shepherdson of High Frequency Economics said in a research note.

He pointed to a surge of 45,000 in the number of temporary workers. The hiring of temps typically heralds the eventual addition of permanent workers.

In another encouraging sign, the underemployed rate -which includes part-time workers who prefer full-time work and people who have given up the job search, as well as the unemployed-dipped to 14.9% from 15.1% in January.

The number of Americans out of work at least six months fell slightly to 5.4 million from 5.5 million, but still makes up nearly 43% of the unemployed.

The average workweek was unchanged at 34.5 hours and average hourly earnings rose 3 cents to $23.31.

Economist John Cannally of LPL Financial called the job growth "solid but not spectacular," adding that it likely would not prevent the Federal Reserve from possibly launching another round of bond purchases to stimulate the economy. While the the job market likely can withstand moderately rising gas prices, a worsening crisis in Europe almost certainly would dampen hiring, he says.

Among industries, professional and business services added 82,000 jobs; education and health added 71,000; leisure and hospitality, 44,000; and manufacturing 31,000.

But some sectors cut payrolls, including construction, by 13,000 and retail by 7,400.

As for the government's report on wholesale inventories, January's gain pushed stockpiles to $475.5 billion in January, up 24% from a low hit in September 2009.

There have been various signs recently of stronger economic growth in recent months including a surge in factory output and even housing showing some signs of life.

The Federal Reserve reported Thursday that Americans' wealth rose 2.1% in the October-December quarter to $58.5 trillion. That was the sharpest quarterly gain in a year.

Encouraging economic news has helped lift consumers' spirits. A gauge of consumer confidence surged in February to the highest point in a year, far above where it stood in October before the jobs and economic news improved. The hope is that a more confident consumer will keep spending and provide support for stronger economic growth. Consumer spending accounts for 70% of economic activity.

Stockpiles at the wholesale level account for about 27% of total business inventories. Stockpiles held by retailers make up about one-third of the total and manufacturing inventories represent about 41% of the total.

USA Today

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