February Job Additions of 227,000 Continue Winning Streak for Economy

The Labor Department released its jobs report for February.

March 9, 2012, 8:38 AM

March 9, 2012 — -- Unemployment was unchanged in February as employers added 227,000 jobs, slightly more than expected, the Labor Department announced Friday.That caps the best six-month streak for job additions since the depths of the financial crisis in 2008.

Economists expected the economy to add about 204,000 non-farm payroll jobs in February, according to Bloomberg News. The unemployment rate was unchanged at 8.3 percent, in line with what economists were expecting. A total of 233,000 jobs were added excluding government employment. The numbers indicate the economy is showing slow but steady improvement.

In January, unemployment fell to 8.3 percent as employers added 243,000 jobs, a larger boost than expected by economists, but the Bureau of Labor Statistics revised that figure upward to 284,000 jobs added. December's figure was also revised upward to 223,000 jobs added from 203,000.

Stephen Bronars, senior economist with Welch Consulting, called Friday's announcement a "solid report" in line with job growth prior to the recession as the labor force grew for the first time in months.

"With payroll employment growth, reports like this the unemployment rate will slowly drift down towards 8 percent by the election even as some discouraged workers re-enter the labor force," he said.

But Bronars said his primary concern is still the long term unemployed. There are still 5.4 million long-term unemployed, which is still a historically high figure, he said.

"The job market continues to be difficult for the long-term unemployed and less-educated workers," Bronars said. "It would be encouraging to see more job gains for workers with less than a college degree and a reduction in the average duration of unemployment."

Most of the growth in jobs was in health care, business and professional services, and leisure and hospitality, possibly attributed to the mild winter. Growth in construction and manufacturing were disappointing however, Bronars said.

The Labor Department reported construction employment changed little in February, after two consecutive months of job gains. Manufacturing jobs increased by 31,000.

Peter Hooper, managing director and chief economist of Deutsche Bank Securities Inc., said "there is still much room for improvement."

The labor force participation rate ticked up in February to 63.9 from 63.7, suggesting that the downtrend in that key measure may be halting, Hooper said.

"Some discouraged workers are no doubt being encouraged by the improving labor market," he said. "This means more job gains will be needed to keep unemployment on a downward trend."

Meanwhile, the workweek for nonfarm payroll workers was unchanged in February at 34.5 hours, having returned to more normal levels in recent months.

"This will support further job gains, as firms turn increasingly to new hires rather than further increasing the hours of their existing workers," he said.

Hooper said there are no signs of wage inflation pressures building, as the growth of average hourly earnings has remained "subdued." Average hourly earnings grew by 3 cents, or 0.1 percent, to $23.31.

The average gain in jobs in February between the mid 1990s and 2007 was 231,000, excluding the recession years of 2002 and 2003. Bronars said the U.S. economy would need above-average growth to make up for all the job losses coming out of a deep recession.

"We have seen big increases in job openings in manufacturing but employers are looking for workers with specific skills so there has been a bit of a lag in seeing the job openings translate into employment gains," Bronars said about previous reports.

Paul Heiselmann, partner in the Technology and Life Sciences practice at BDO, said his clients across industries are "cautiously optimistic."

"As a result, they're analyzing their product cycles and investing in people," he said.

In the manufacturing and tech-related sectors, for example, Heiselmann said employers are "investing conservatively but ramping up a little bit."

Weekly jobless claims ticked up last week by 8,000 to a seasonally adjusted 362,000, the Labor Department announced Thursday. The four-week average was essentially unchanged and stayed near a four-year low.

The mild winter is normally good news for construction employment but the housing sector is still mired in a slump, Bronars said.

U.S. home prices ended 2011 at the lowest levels since mid-2006, according to Standard & Poor's Case-Shiller home-price indexes. The national composite index showed home prices are now down 33.8 percent from their peak in the second quarter of 2006, when the housing bubble began to burst.

The 30-year fixed-rate mortgage averaged 3.88 percent with an average 0.8 point for the week ending March 8, down from last week when it averaged 3.90 percent, Freddie Mac announced on Thursday. Last year at this time, the 30-year rate averaged 4.88 percent. The 15-year fixed-rate mortgage this week averaged 3.13 percent, down from last week when it averaged 3.17 percent. A year ago at this time, the 15-year rate averaged 4.15 percent.