Jobless Rate in U.S. Decreased to 8.9%, Lowest Since April 2009
Joblessness in the U.S. unexpectedly fell to 8.9 percent in February, the lowest level in almost two years, and employers boosted payrolls amid growing confidence in the expansion.
The rate dropped for a third straight month and employment climbed by 192,000, according to Labor Department figures released yesterday in Washington. The median estimate in a Bloomberg News survey of economists projected unemployment would climb to 9.1 percent.
Hiring was widespread, with manufacturing, construction and transportation companies adding workers, underscoring Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress this week that there are “grounds for optimism” in the labor market. Job gains are giving consumers the means to keep spending at retailers such as J.C. Penney Co. and Macy’s Inc. (M)
Payrolls “will be accelerating from here,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Companies are at the point where sales keep improving and they need to hire more people.”
The Standard & Poor’s 500 Index fell 0.7 percent yesterday to close at 1,321.15 in New York on concern wage gains may not keep up with rising energy prices. The yield on the benchmark 10-year Treasury note fell to 3.49 percent late yesterday from 3.56 percent the previous day.
The jump in payrolls partly reflected a return to more seasonable weather and followed a 63,000 gain in January. Jobs were forecast to increase 196,000, according to the survey median.
Payroll estimates in a Bloomberg survey of 84 economists ranged from gains of 100,000 to 297,000. January employment was revised up from an initially reported gain of 36,000, while December payrolls increased 152,000, up from a previously reported 121,000 rise.
Some U.S. companies are ramping up hiring. Santa Clara, California-based Intel Corp. (INTC), the world’s largest chipmaker, and Home Depot Inc. (HD), based on Atlanta, announced plans last month to hire thousands of workers.
Private hiring, which excludes government agencies, rose by 222,000 in February, exceeding the 200,000 median forecast in the Bloomberg survey. Private payroll gains averaged 145,000 during the first two months of the year, compared with 120,000 during the last half of 2010.
“We believe that we are in a continued positive economic recovery that will lead to positive labor growth over the course of the next couple of years,” Carl Camden, chief executive officer at Troy, Michigan-based temporary staffing provider Kelly Services Inc. (KELYA), said Feb. 24 at a conference in Boston. “We see strength in U.S. conditions.”
The number of unemployed fell by 190,000, and those employed rose by 250,000, according to the Labor Department’s survey of households that determines the rate of unemployment. The size of the labor force increased by 60,000 workers.
President Barack Obama last week told the first meeting of his panel of outside economic advisers that the U.S. must deal with stubbornly high unemployment even as the recovery is well under way.
If sustained, the pace of last month’s increase in payrolls would reduce the unemployment rate to 6.9 percent by November 2012, when Obama faces re-election, said Guy LeBas, chief fixed- income strategist at Janney Montgomery Scott LLC in Philadelphia. The rate was 7.8 percent when Obama took office in January 2009.
The labor market “has improved only slowly,” and it may take “several years” for the unemployment rate to reach a “more normal level,” Bernanke said March 1 during testimony before the Senate Banking Committee.
Still, “we do see some grounds for optimism about the job market over the next few quarters, including notable declines in the unemployment rate in December and January, a drop in new claims for unemployment insurance, and an improvement in firms’ hiring plans,” Bernanke said.
Government payrolls decreased by 30,000 last month, reflecting cuts at the state and local level. Federal government employment was unchanged.
Factory payrolls increased by 33,000, exceeding the survey forecast of a 25,000 gain. A measure of the share of industries showing job gains last month rose to 68.2, the highest since May 1998.
J.C. Penney, based in Plano, Texas, New York-based Macy’s and Ross Stores Inc. (ROST) were among retailers this week reporting February same-store sales that topped analysts’ estimates. Purchases at stores open at least a year climbed 6.4 percent at J.C. Penney, 5.8 percent at Macy’s and 3 percent at Pleasanton, California-based Ross, company data showed.
Employment at service-providers rose 122,000. Construction payrolls rose 33,000 and transportation and warehousing jobs increased by 22,000. Retail trade employment declined 8,100.
A return to more seasonable temperatures helped boost payrolls last month.
Nationwide, temperatures during the week of the February employment survey were near normal, except for the central and southern Great Plains, according to the National Weather Service. Economists said a snowstorm that spread from the Midwest and the South to New England during the prior month’s survey week likely depressed January numbers as businesses temporarily closed.
Weather may have also skewed figures for average hourly earnings and the length of the workweek. Earnings averaged $22.87 an hour last month, little changed after a 0.4 percent jump in January. The average work week for all workers held at 34.2 hours.
“We believe that the workweek has been depressed by bad weather in recent months and the unchanged wage rate in February probably reflects a payback for an outsized gain” in January, David Greenlaw, chief financial economist at Morgan Stanley in New York, said in a note to clients.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 15.9 percent, the lowest since April 2009.
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