U.S. Payroll Gain Caps Best Six-Month Job Growth Streak Since ’06: Economy
Employers in the U.S. boosted payrolls more than forecast in February, capping the best six- month streak of job growth since 2006 and sending stocks higher.
The 227,000 increase followed a revised 284,000 gain in January that was bigger than first estimated, Labor Department figures showed today in Washington. The median projection of economists in a Bloomberg News survey called for a 210,000 rise. The jobless rate held at 8.3 percent, even as 476,000 more workers sought employment.
More jobs are helping fuel the wage gains that drive consumer spending, which accounts for about 70 percent of the economy. The latest pickup in employment bolsters President Barack Obama’s bid for re-election, while it 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 remain low through late 2014.
“The labor market has found its legs in the last few months, and it looks like there’s enough of a broad base that the momentum can be sustained,” said Julia Coronado, chief economist for North America at BNP Paribas in New York, who projected a 225,000 gain in payrolls. “This leaves the Fed in a bit of limbo, as it’s not strong enough to convince them that we’re about to accelerate to much stronger rates of economic growth.”
The Standard & Poor’s 500 Index rose 0.4 percent to 1,370.87 at the close in New York. The yield on the benchmark 10-year Treasury note climbed to 2.03 percent from 2.01 percent late yesterday.
Some 1.2 million jobs were created in the past six months, the most since the same period ended May 2006. Revisions added a total of 61,000 jobs to payrolls in December and January.
Bank of America Corp. Chief Executive Officer Brian T. Moynihan said he sees signs of a rebound in consumer spending that would help improve earnings at the second-biggest U.S. lender.
“The American consumer is healing,” Moynihan, 52, said in an interview that aired on Bloomberg Television today. “There’s still an unemployment problem, we all have to work to solve that. But this economy is much better than it was six months ago or six months before that. It just keeps feeling better.”
Bank of America sold $33 billion in assets and announced 30,000 job cuts last year as Moynihan sought to trim expenses in line with stagnant revenue.
A separate report today from the Commerce Department showed the trade deficit widened in January to the largest since October 2008 as imports rose to a record.
The gap increased 4.3 percent to $52.6 billion from a revised $50.4 billion in December. The median estimate of economists surveyed by Bloomberg News called for a deficit of $49 billion in January. Exports of capital goods, as well as cars and automobile parts, climbed to a record.
The U.S. 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.
“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.
The participation rate, which indicates the share of working-age people in the labor force, rose to 63.9 percent from 63.7 percent.
Private payrolls, which exclude government agencies, rose 233,000 in February after a revised gain of 285,000 the prior month that made it the biggest increase since February 2006. They were projected to climb by 225,000. Manufacturing payrolls increased by 31,000 after a revised 52,000 gain.
Even with the “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.
March 13 Meeting
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 Commerce Department last week reported the economy grew at a 3 percent annual pace in the fourth quarter after a 1.8 percent gain in the prior three months.
“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.
Employment at service-providers increased 203,000. Retail payrolls fell 7,400 in February. 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.
Government payrolls decreased by 6,000 in February, reflecting cutbacks at the federal and state levels.
Average hourly earnings rose 0.1 percent to $23.31, today’s report showed. The workweek for all employees averaged 34.5 hours for a third consecutive month.
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.
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