Advertisement

SKIP ADVERTISEMENT

As Job Creation Increases in February, Economists See Signs of a Spring Thaw

The line outside a screening session for job applicants in Coney Island, N.Y., on Tuesday.   Credit...Shannon Stapleton/Reuters

The American economy appeared to emerge from a winter hibernation in February, creating more jobs than in either of the previous two months and suggesting that momentum in the labor market might gradually build with the arrival of spring.

While analysts cautioned that the report on Friday from the Labor Department was hardly cause for celebration, it eased fears of another prolonged slowdown, which had been raised by weak figures for hiring in December and January and mixed signals from recent releases of other data. The improvement last month led some experts to conclude that a hard winter, not a fundamental downshift, was the prime mover behind the economy’s lackluster performance at the end of 2013 and the beginning of 2014.

With employers hiring 175,000 workers, the payroll gain in February was still well short of the pace needed to return the economy to full employment anytime soon or to quickly reduce the ranks of the long-term unemployed. But it was twice the number of jobs added in December, when the cold and snow arrived, and it came against a backdrop of more wintry weather last month.

“The report showed solid job growth in February despite clearly negative effects from the weather,” said Dean Maki, chief United States economist at Barclays. “It suggests the jobs numbers should improve as the weather gets better.”

And even though the unemployment rate rose 0.1 percentage point to 6.7 percent, some economists were actually encouraged, paradoxical as that might seem, because they interpreted the uptick as a sign that more Americans were seeing signs of improving job opportunities and returning to the labor force.

The new data for job creation also made it nearly certain that the Federal Reserve would stick with its plan to ease back its stimulus efforts when policy makers meet later this month. In December, the Fed announced the scaling-back after monthly job gains of more than 200,000 in the autumn, only to watch the pace of hiring quickly shrivel.

While the Fed is steadily reducing its monthly bond purchases, aimed at stimulating the economy, overall monetary policy should remain “highly accommodative” given the still-fragile labor market, William C. Dudley, president of the Federal Reserve Bank of New York, said in remarks on Friday.

Short-term interest rates were lowered to near zero by Fed policy makers in late 2008, in the depths of the recession, and are not expected to rise before 2015 at the earliest, said Michael T. Darda, market strategist at MKM Partners, a research and trading firm in Stamford, Conn.

“The debate centers on whether they will act in 2015 or wait till 2016,” Mr. Darda said. The unemployment rate may have fallen to 6.7 percent from 7.9 percent at the beginning of 2013, but other labor market indicators — like the proportion of Americans in the work force and the level of long-term joblessness — remain very weak.

Fed policy makers are starting to focus on these other yardsticks as well as the better-known unemployment rate, he and other analysts say, making them reluctant to start raising interest rates until the labor market improves more broadly. “We could see the unemployment rate come down to normal levels soon, but these other measures might take years,” Mr. Darda said.

While the number of people who have been unemployed for less than five weeks fell by 61,000, to 2.3 million, in February, the ranks of the long-term jobless, who have been out of work for 27 weeks or more, rose by 203,000, to 3.8 million.

Their fate has resulted in a political standoff in Washington, with the White House pressing for an extension of unemployment benefits for the long-term jobless while Republicans argue that Democrats have not come up with an acceptable way to cover the $6 billion cost without adding to the deficit. About 1.3 million Americans lost benefits when they expired at the end of 2013; another 3.6 million will lose the extended unemployment insurance this year if a deal can’t be reached on Capitol Hill.

The broadest possible measure of unemployment, which includes people who are working part time but want a full-time job, fell by 0.1 percentage point, to 12.6 percent.

The official jobless rate rose because an additional 264,000 joined the search for a job, adding to the overall labor force, while just 42,000, according to estimates based on a survey of households, found a new job. “As people come back and see jobs opening up, there should be a rebound in the labor force,” said Joseph G. Carson, director of global economic research at AllianceBernstein. “The overall direction is a lower jobless rate and more job growth going forward.”

The Labor Department also revised upward its estimate of the number of jobs created in December and January, but payroll gains for those months remained well below the recent trend of about 185,000 added jobs a month.

For all the anticipation that preceded Friday’s report, Wall Street’s reaction was muted. The Dow Jones industrial average edged up by 30.83 points or 0.19 percent, closing at 16,452.72. The Standard & Poor’s 500-stock index rose 1.01 points or 0.05 percent, finishing at 1,878.04. But the Nasdaq composite fell 15.90 points or 0.37 percent, to end at 4,336.22.

In bond trading, the price of the benchmark 10-year Treasury note fell 14/32 to 99 21/32, and its yield rose to 2.79 percent from 2.74 percent late Thursday.

One thing on which many experts did agree on Friday was that the weather in February was to blame for a slight decline in the length of the average workweek. The Labor Department also reported that 601,000 people in the household survey said they could not get to work because of the weather last month, nearly double the number who typically say that in February.

White-collar professions, including accounting, bookkeeping and consulting, led the upswing, as the professional and business service sector gained 79,000 jobs. Blue-collar hiring was less robust, with the manufacturing sector adding 6,000 positions and construction gaining 15,000.

After losing jobs in January, women took a majority of the new jobs in February, gaining 99,000 jobs to men’s 76,000. Women have more than made up their losses in the recession, gaining 2.5 million jobs in the recovery, compared with 2.1 million jobs lost, while men have struggled, gaining 4.2 million jobs after losing 5.3 million in the downturn.

But that does not mean that women are necessarily coming out ahead.

“The good news is that women are getting jobs,” said Joan Entmacher, vice president for family economic security at the National Women’s Law Center. “The bad news is they have very low pay and bad working conditions.”

Shaila Dewan contributed reporting.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: As Job Creation Increases in February, Economists See Signs of a Spring Thaw. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT