US economy adds 379,000 jobs in February as hiring picks up steam

Well, that’s more like it.

The United States economy added 379,000 jobs in February, the US Bureau of Labor Statistics said on Friday, signalling that the labour market recovery is accelerating after a brutal close to 2020.

February’s gains were even more impressive given the harsh winter weather that tore through the southern states last month.

And most of the jobs that were added in February were in leisure and hospitality – the hardest-hit sector of the economy.

Another bright spot: January’s dismal non-farm payrolls figure was revised upward from an anaemic 49,000 to a modest but improved 166,000.

While February’s headline number was better than expected, the labour market recovery continues to lag a rebound in other parts of the economy.

Some 745,000 Americans filed for first-time unemployment benefits with states last week – 9,000 more than the previous week, the US Department of Labor said on Thursday.

Weekly jobless claims are a proxy for layoffs, which remain well above their pre-pandemic peak of 665,000 in March 2009.

The February jobs report is also deeply symbolic because it offers a year-over-year comparison with February 2020 – the pre-pandemic benchmark for many labour market statistics.

The unemployment rate last month ticked down slightly to 6.2 percent – encouraging, but still nearly double the pre-pandemic rate of 3.5 percent from a year earlier.

The number of unemployed people last month held nearly steady at 10 million, but that is nearly double the February 2020 count of 5.7 million.

The labour force participation rate – which measures the number of people either working or actively looking for a job – also held steady at 61.4 percent last month, but that is 1.9 percentage points lower than a year earlier.

Many forecasters, including the Congressional Budget Office, think the nation’s jobs market won’t be fully healed until 2024.

That could lead to deep scarring for the nation’s unemployed. The longer people are out of work, the more likely their skills are to erode and their networks to dry up – making it even harder for them to land a job.

But the trend is towards improvement after the labour market was pummelled by surging COVID-19 infections and business-sapping restrictions in December, when the economy shed 306,000 jobs.

Newly confirmed COVID-19 infections are now stabilising and trending downwards, while the nationwide vaccination drive, although bumpy, is well under way.

States and cities are starting to lift coronavirus pandemic restrictions. Cinemas and theatres in New York City will reopen to limited capacity on Friday.

And on Tuesday, Texas Governor Greg Abbott announced an executive order to allow businesses in the state to fully reopen.

But lifting restriction is only part of the equation. Consumers also have to feel comfortable enough to start engaging in the types of activity that can get legions of the nation’s unemployed back to work – such as dining out, going to movies, flying and staying at hotels.

Meanwhile, data and other developments suggest the broader economy is poised to give the jobs market some help.

US household incomes rose 10 percent in January- the second-biggest jump on record – thanks in large part to the $900,000 round of virus relief aid that Congress passed in December.

That contributed to a surge in retail sales in January – crucial for the health of the economy because roughly two-thirds of US growth is driven by consumer spending.

And another economic boost is almost surely in the cards, as President Joe Biden’s proposed stimulus package winds its way through Congress.

The US Senate is set to start debating the $1.9 trillion coronavirus aid bill on Friday.

The strong February jobs report promises to fuel arguments by Republicans that the aid package is overly generous.

The bill, which passed the House of Representatives before heading to the Senate, includes such signature items as $1,400 stimulus cheques for most Americans, a $400 federal weekly top-up to state unemployment benefits and more funds for struggling small businesses.

Proponents of the bill argue that it is necessary to propel the economy forward and offer much-needed relief to Americans who have borne the brunt of the pandemic, including women and minorities.

That argument is bolstered by the African-American unemployment rate, which ticked up to 9.9 percent in February from 9.2 percent the previous month.

Fears have been mounting in financial markets that Biden’s massive stimulus proposal could stoke inflation and force the Federal Reserve to raise interest rates – which would cool the economy and jobs creation.

Fed Chairman Jerome Powell has tried repeatedly to assuage concerns that the Fed could hike borrowing costs by reiterating the central bank’s commitment to prioritise the jobs market recovery and even tolerate inflation inching above its target rate of 2 percent for a brief period.

Many economists expect inflation to rise as the economy returns to business as usual and as kinks in supply chains lead to temporary shortages. But many believe such effects would prove temporary.