Unemployment Rate Slips as US Adds Jobs

Friday, 04 Mar 2011 08:33 AM

 

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U.S. employers added 192,000 workers in February, amid an improving economy and more seasonable weather, and the unemployment rate unexpectedly declined to 8.9 percent, the lowest level since April 2009.

The gain in payrolls followed a 63,000 increase in January and compared with the 196,000 median estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. Employment rose in manufacturing, construction and temporary help agencies, while state and local government payrolls slumped.

Bigger monthly job gains would substantiate Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress this week that there are “grounds for optimism” about the labor market in coming months. Employment growth and increases in confidence are contributing to sales gains at companies like J.C. Penney Co. and Macy’s Inc. (M) as Americans continue to spend.

“The labor market is improving, job gains are accelerating,” Richard DeKaser, an economist at Parthenon Group in Boston, said before the report. “It’s very clear weather was a factor in the depressed January results. The smart way to look at this is to combine January and February and divide by two.”

Payroll estimates in the Bloomberg survey of 84 economists ranged from gains of 100,000 to 297,000. January employment was revised up from a previously reported gain of 36,000, while December payrolls increased 152,000 after a previously reported 121,000 rise.

A measure of the share of industries showing job gains last month rose to 68.2, the highest since May 1988.

The unemployment rate was projected to rise to 9.1 percent, according to the survey median. Estimates ranged from 8.9 percent to 9.4 percent. The jobless rate declined as the number of unemployed fell by 190,000 and number of employment rose by 250,000. The size of the labor force increased by 60,000.

February Weather

Nationwide, temperatures during the week of the February employment survey were near normal, except for the central and southern Great Plains, according to National Weather Service. In contrast, 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.

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.

Factory payrolls increased by 33,000 last month, exceeding the survey forecast of a 25,000 gain.

Service Employment

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.

Government payrolls decreased by 30,000 last month reflecting cuts at the state and local level. Federal government employment was unchanged.

Average hourly earnings rose to $22.87 from $22.86 in the prior month, today’s report showed. The average work week for all workers held at 34.2 hours.

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 from 16.1 percent.

The report also showed a decrease in long-term unemployed Americans. The number of people unemployed for 27 weeks or more was little changed as a percentage of all jobless, at 43.9 percent.

Bernanke on Employment

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.

Intel Corp. (INTC), the world’s largest chipmaker, is among U.S. companies such as Home Depot Inc. (HD) that announced plans last month to hire thousands of new workers.

Economic growth accelerated to a 2.8 percent annual rate in the fourth quarter of 2010 as consumer spending climbed by the most in four years.

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.
Retail Sales

J.C. Penney, Macy’s and Ross Stores Inc. (ROST) were among retailers yesterday 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 Ross, company data showed.

“We are encouraged by our solid start to the year,” Michael Balmuth, chief executive officer of Pleasanton, California-based discounter Ross Stores, said in a statement. Even so, “the much more important March/April holiday selling period is still ahead.”

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