U.S. Payroll Gain Caps Best Six-Month Job Growth Streak Since ’06: Economy
Employers in the U.S. took on more workers than forecast in February, completing the best six months for payroll growth since 2006 and showing more improvement in the labor market.
The 227,000 increase followed a revised 284,000 gain in January that was bigger than first estimated, Labor Department figures showed yesterday in Washington. The median projection of economists in a Bloomberg News survey called for a 210,000 advance. The jobless rate held at a three-year-low of 8.3 percent even as 476,000 more workers sought employment.
Better job creation lays the groundwork for a pickup in household spending and faster economic growth that may improve President Barack Obama’s bid for re-election. At the same time, progress in the labor market may not be enough to satisfy Federal Reserve Chairman Ben S. Bernanke, who last week said the job market remains “far from normal” and repeated that borrowing costs will probably stay low through late 2014.
“The labor market continues to recover, and we’re close to a self-sustaining expansion where you have job gains driving income gains, driving consumer spending, driving further job gains,” said Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburgh. “Job growth has been stronger than the Fed was expecting, but I don’t think this changes their decision-making. They’ve made it clear that they consider the unemployment rate too high.”
Some 1.2 million jobs were created in the past six months, the most since the same period ended May 2006. Revisions in yesterday’s report added a total of 61,000 jobs to payrolls in December and January.
The unemployment rate, derived from a separate survey of households, was forecast to remain at 8.3 percent, according to the survey median. The jobless rate held steady even as the survey showed the labor force grew. Employment climbed by 428,000 in February, while the labor force rose by 476,000.
The participation rate, a measure of the share of working- age people who are in the labor force, increased to 63.9 percent from 63.7 percent.
“The economy has been heading in the right direction -- today’s report is further confirmation of that,” Alan Krueger, chairman of the White House Council of Economic Advisers, said yesterday on Bloomberg’s “In the Loop” with Betty Liu. “What we’d like to see is for this job growth to continue, for this to lead to a more virtuous cycle, which raises aggregate demand and puts us on a stronger upward trajectory.”
Private payrolls, which exclude government agencies, rose 233,000 in February after a revised gain of 285,000 the prior month that was the biggest since February 2006. Factories added another 31,000 jobs after a revised 52,000 gain.
“There is hiring going on,” Richard Fearon, chief financial officer at Eaton Corp. (ETN) said at a March 6 industrial conference in New York. The Cleveland-based maker of circuit breakers and truck transmissions will “definitely need more manpower to serve” growing demand for tractor-trailers and for the equipment used in construction and hydraulics, he said.
While there are “positive developments” in the job market, Bernanke told lawmakers last week the “modest and uneven” expansion needs the support of monetary policy. The central bank said in January that economic conditions are likely to warrant low interest rates at least through late 2014.
Refrain From Easing
Policy makers meeting on March 13 are likely to repeat that view while refraining from any additional easing measures, say economists, including Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida.
“The unemployment rate remains elevated, long-term unemployment is still near record levels and the number of persons working part time for economic reasons is very high,” Bernanke said during a Feb. 29 testimony to Congress. Fed policy makers judge “that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives” for stable prices and maximum employment, he said.
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 a three-year low of 14.9 percent from 15.1 percent.
The report also showed a decrease in long-term unemployed Americans. The number of people without a job for 27 weeks or more fell as a percentage of all jobless, to 42.6 percent from 42.9 percent.
Employment at service-providers increased 203,000. Professional and business service employment increased 82,000 last month, including a 45,200 pickup in temporary hiring.
Education and health services employment jumped 71,000, the most since September 2006, according the Labor Department.
Construction companies reduced payrolls by 13,000 workers last month, the biggest drop since January 2011.
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