Payrolls in U.S. Rise More Than Forecast; Jobless Rate Climbs
Employers added more workers than projected in February, indicating the U.S. economy is starting to bounce back from a weather-induced setback. The jobless rate unexpectedly climbed from a five-year low.
The 175,000 gain in employment followed a revised 129,000 increase the prior month that was bigger than initially estimated, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg survey called for a 149,000 advance in February. Unemployment rose to 6.7 percent from 6.6 percent as more people entered the labor force and couldn’t find work.
The report indicates employers remain upbeat about the economy’s prospects after winter storms and freezing temperatures across the eastern U.S. slowed consumer spending, housing and manufacturing. Lowe’s Cos. is among those boosting headcount, setting the stage for further gains as Americans return to stores.
“The fundamentals are good,” Joe LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, said before the report. “Faster job growth means faster income and more discretionary spending. Ultimately, with more business spending, not only will they hire more people, they’ll hire more capital. Everything becomes self-reinforcing.”
The figures showed hiring at professional and business services increased by the most in a year, while payrolls also rebounded in education and health services. Government agencies, factories and construction firms also added to headcounts last month.
Revisions to prior reports added a total of 25,000 jobs to overall payrolls in the previous two months.
Bloomberg survey estimates of 92 economists for February payrolls ranged from gains of 100,000 to 220,000. Last year, the U.S. added 194,000 jobs each month, on average.
The unemployment rate was forecast to hold at 6.6 percent in February. The Labor Department’s survey of households showed an increase in people entering the labor force. The so-called participation rate held at 63 percent.
The figures showed 601,000 Americans weren’t at work because of weather during the survey week, the most since 2010, the agency said. Bad weather can affect the payroll count if employees didn’t receive compensation for the entire pay period that included the 12th of month.
Hours worked declined as well because of the inclement conditions. The average workweek for all employees dropped to 34.2 hours in February from 34.3 hours. For production and non-supervisory employees, hours worked fell to 33.3 from 33.5.
Almost 6.9 million people worked less than a full week, the most since record-keeping began in 1978, the agency said.
The week ended Feb. 15 was the coldest second week of February since 2011, according to weather-data provider Planalytics Inc. The South Atlantic region of the U.S. experienced the most snowfall since 1983 and New England registered the most in 20 years during the period, the Berwyn, Pennsylvania-based firm said. February’s winter blitz followed the chilliest January in three years.
Private employment, which excludes government agencies, rose by 162,000 in February after 145,000 the prior month. Factory payrolls increased by 6,000 for a second month and construction companies took on 15,000 workers.
Employment at private service-providers rose 140,000. Jobs in education and health services rose 33,000 in February, the most since August. Temporary-help service employment rose 24,400.
Average hourly earnings climbed by 0.4 percent, the most since June 2013, to $24.31 in February from the prior month.
As winter weather gives way to warmer temperatures, home-improvement retailers Lowe’s and Home Depot Inc. are planning on hiring. Mooresville, North Carolina-based Lowe’s announced Feb. 19 that it will be adding about 25,000 seasonal employees this year for the industry’s busiest season. Home Depot will add 80,000 positions for the spring and summer, matching 2013.
“Looking at the landscape for 2014, economic forecast suggests moderately accelerating growth, stronger job and income growth should create a more favorable environment for consumer spending,” said Robert Niblock, the company’s chief executive officer, in a Feb. 26 earnings call. That, “coupled with the lag benefit of the housing recovery should generate continued growth in the home improvement industry.”
Faster employment growth that stokes wage gains and brightens consumer spirits may help embolden households, whose spending accounts for almost 70 percent of the economy.
Online retailer Amazon.com is bringing on more than 2,500 full-time workers across its growing U.S. fulfillment network, according to a Feb. 12 statement.
Meantime, Federal Reserve policy makers have de-emphasized the jobless rate as a point at which it would consider raising borrowing costs. Labor-market improvement is one reason why policy makers have dialed back monthly bond buying by $10 billion at each of its past two meetings.
While Fed Chair Janet Yellen reiterated the threshold in testimony before the Senate Banking Committee Feb. 27, the Federal Open Market Committee debated “the reliability of the unemployment rate as an indicator of overall labor-market conditions,” minutes of Fed officials’ last meeting showed.