The number of new hires rose sharply in February as U.S. economic activity picked up and Covid-19 cases steadily declined and the introduction of vaccines gave hope for more growth.
The Labor Department reported Friday that the number of non-farm workers rose by 379,000 for the month and the unemployment rate fell to 6.2%. This compares to expectations of 210,000 new jobs and a stable unemployment rate of 6.3% in January.
An alternative measure of unemployment, which includes discouraged workers and those working part-time for economic reasons, remained unchanged at 11.1%.
“Today’s job report is on a very positive note in the warmer months and the pace of COVID-19 vaccinations is accelerating,” said Tony Bedikian, head of global markets at Citizens Bank. “While the labor market still has a lot of catching up to do, we are in a different place than a year ago and the economy seems poised for a strong recovery.”
Almost all of the growth in employment came from the ailing leisure and hospitality sector, which saw some sectors jump 355,000 due to a relaxation of food restrictions. Bars and restaurants gained 286,000 jobs, while hotels added 36,000 and entertainment, gaming and leisure jobs added 33,000.
Despite the growth, the industry is still 3.5 million below its employment level from a year ago, right before the worst of the pandemic. The increase in recruitment resulted in the sector’s unemployment rate falling from 15.9% a month ago to 13.5%. In the accommodation and catering services subsector, the unemployment rate fell from 15.3% to 12.7%.
“We see great opportunities in the service sector,” said Amy Glaser, senior vice president at national recruitment firm Adecco. “We assume that the weather is getting warmer and warmer [hospitality] The sector will explode in the next eight to 12 weeks. “
Exchange futures rose sharply after the report, with Dow industrials pointing to a 235-point gain on the open. Government bond yields were also higher.
Friday’s report showed January hires were also stronger than originally reported, with the monthly balance revised from 49,000 to 166,000. However, the December number was cut from a loss of 227,000 to a decrease of 306,000.
The number of health care jobs rose 46,000 in February, while retail increased 41,000. Manufacturing also saw an increase of 21,000.
Several sectors posted losses.
Overall, local and state education jobs fell by 69,000, while construction costs fell by 61,000 and mining lost 8,000.
Overall, there were 8.5 million fewer Americans employed in February than a year ago, down only slightly from January. The workforce increased by 50,000, but the participation rate remained constant at 61.4%, a decrease of 1.9 percentage points from the previous year.
The average work week also fell over the course of the month, falling 0.3 hours to 34.6 hours.
Employment growth had slowed in late 2020 as the number of cases rose and the government shut down again over the winter. Nonetheless, most economic indicators continued to rise and GDP growth in the first quarter is expected to contradict previous expectations for a flat or marginally better environment.
Federal Reserve officials have been closely monitoring employment numbers not only for overall payroll growth and the decline in the unemployment rate, but also for the breadth of job recovery. The central bank has pledged not to raise interest rates until profits are spread across income, gender and race lines, even if that means the risk of higher inflation.
In February there was bad news on that front: the unemployment rate for blacks rose from 9.2% a month ago to 9.9%. The rate for Hispanics fell from 8.6% to 8.5%, while the rate for Asians fell from 6.6% to 5.1%.
Fed chairman Jerome Powell reiterated that stance Thursday, saying he does not foresee the US economy meeting the central bank’s targets at any point this year.
Despite the February gain, the job market still has a long way to go and millions of workers displaced by the pandemic are still looking for work. Current indicators show that job postings continue to rise but are still well below what is needed for a full recovery.