The 651,000 jobs lost in February was not as bad as some feared, but it turns out December and January were worse than first thought
The nation's unemployment rate jumped to 8.1% as the economy lost 651,000 jobs in February, the Labor Dept. reported on Mar. 6. While the report showed the deepening recession was continuing to batter the nation's wage earners, the numbers were lower than some of the most dire predictions. The January unemployment rate was 7.6%.
The government also revised upward the number of jobs shed by the economy in December and January, meaning that the jobs picture has been worse than the original data indicated. Stock markets gained on the report, with the Dow Jones Industrial index rising more than 1.5% in morning trading before falling back.
"Job losses were large and widespread across all major industry sectors," the Labor Dept. said in a news release, noting that payroll employment has declined by 2.6 million positions over the past four months. The largest job losses came in professional and business services, manufacturing, and construction. Health care, one of the few bright spots in the employment sector, had a net gain of 27,000 jobs.
Although some analysts had suggested the February job losses might outpace those of recent months, the revisions actually made February's numbers look slightly better. The department said that in December the economy lost 681,000 jobs, a total revised upward from 577,000, and that January's job loss was 655,000, up from 598,000. The February job figures are also subject to revision in future months.
Still, economists are not suggesting the unemployment picture is going to improve anytime soon. Overall, U.S. job losses are running at a 60-year high.
"Is this good news or bad news?" Capital Economics asked in a written statement. "On the one hand, the new estimates suggest that the contraction in employment peaked in December with a 681,000 decline, followed by a 655,000 loss in January. In other words, the worst could be behind us. On the other hand, it turns out that the labor market was in an even worse state than we previously thought and any improvement over the past couple of months is marginal at best."
Harm Bandholz, an economist for Unicredit Research, said in a written analysis: "Unfortunately there is no end in sight for the labor market slump. In light of the ongoing recession, empty order books, and no hope for a quick turnaround, firms will continue to lay off workers on a large scale while at the same time stop hiring new staff."
Economists at Société Générale (SOGN.PA) said that while monthly job losses were steeper in the 1974 recession, the duration of job losses in the current downturn is longer. "A turn in employment is unlikely until consumption stabilizes," they added. "January consumption gains were encouraging but could have been a one-month bounce." They added that February results and a federal government program to grease the wheels of consumer lending "are encouraging early signals to stop the hemorrhaging of jobs."
In a press release, Christine Owens, executive director of the National Employment Law Project, urged states to expand the eligibility for unemployment insurance, using federal stimulus money. The group said that "figures show that only 37% of Americans unemployed actually collect jobless benefits, while thousands of part-time, low-wage, high-turnover, and female workers are not eligible to collect under the policies of many states."