A report from Washington on Friday showed that the United States added more jobs than expected in February, reversing a trend of tepid hiring in December and January that was mostly blamed on the brutal weather conditions that have been blasting the country all winter.
In its heavily watched monthly Employment Situation report, the Labor Department said that the US added 175,000 nonfarm jobs last month, topping economist calls for about 146,000 new jobs.
The unemployment rate inched up for the first time in 14 months as more people took to the streets looking for work, rising to 6.7 percent from a five-year low of 6.6 percent in January. Economists thought the unemployment rate would hold at 6.6 percent.
The so-called participation rate for February was flat at 63.0 percent. Although the unemployment rate nipped upward, it’s still an encouraging sign that more people started looking for work because that generally means that people are optimistic that jobs are available.
Meanwhile, the January and December figures were revised upward by a total of 25,000 new jobs. January was hiked to 129,000 from an original estimate of 113,000 and December was increased to 84,000 from 75,000 (which was first estimated in January at 74,000).
Severe ice and snowy conditions have been attributed to the paltry job growth in previous months, although not without debate amongst economists and analysts as to validity of the argument and the real culprit should it be specious. With February job creation rising back to more normal levels – even in the face of inclement weather continuing – it’s likely setting the stage for acceleration in the labor markets as spring weather eventually rolls in. In the past 12 months, the US added on average 189,000 new jobs each month.
The largest gain in jobs in February came in professional and business services, with employment rising by 79,000. Wholesale trade added 15,000 jobs. Employment at food services and drinking establishments held an upward trend, creating 21,000 jobs last month. Construction jobs grew by 15,000. Healthcare positions increased by 10,000.
On the flip side, retail trade shed 4,000 jobs and the information category lost 16,000 positions.
All other categories; such as government, mining, manufacturing and financial activities; were essentially unchanged for the month.
The better-than-expected report gives the Federal Reserve some ammunition to continue to unwind its massive asset-buying package meant to stimulate the economy. From September 2012 through December 2013, the Fed was buying $85 billion each month in Treasuries and mortgage-backed securities. That figure was reduced to $75 billion in January and then to $65 billion in February.
The spate of soft economic data so far this year has created a bit of a quandary for the main bank with regards to how fast it should continue to taper its stimulus. Most Fed officials, included new Chairwomen Janet Yellen, have said that they believe the sluggishness of the economy so far this year is because of the weather.
The Federal Open Markets Committee meets again on March 18 – 19 to make another decision on whether or not to scale back asset purchases again this month. If other data improves like today's report, expect the Fed to save another $10 billion each month.
After initially cheering the report, Wall Street has relinquished the gains 90 minutes into Friday’s trading session. The Dow Jones Industrial Average is flat, The S&P 500, which made its 50th record high on Thursday, is now in the red by 6 points and the Nasdaq is off by 30 points.
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