U.S. employers added more jobs than forecast in February and the unemployment rate declined, suggesting the labor market is clawing its way forward again following several disappointing months. Payrolls increased 379,000 after an upwardly revised 166,000 January increase, according to a Labor Department report Friday. Economists in a Bloomberg survey projected a 200,000 February gain. The unemployment rate dropped to 6.2%.
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“The core story here is that the re-opening of services will be the dominant factor in the payroll numbers over the next few months,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note. In March, job growth “could easily see a 1 million” gain in employment, unless there’s a renewed surge in infections, he said.
The report adds to recent evidence, including data on manufacturing and retail sales, that the economy is gaining momentum. High-frequency data have also shown additional improvement, including an uptick in restaurant bookings.
Many economists expect to see job prospects, and economic growth, improve in the coming months as vaccinations pick up and virus concerns ease further.
Policy makers are closely monitoring the labor market as they consider a another economic stimulus bill. President Joe Biden’s $1.9 trillion relief package — which includes an extension of federal unemployment benefits — passed the House of Representatives on Saturday and the Senate’s final vote is expected as soon as this weekend.
Federal Reserve Chair Jerome Powell said in a webinar on Thursday that the labor market is still a long way from maximum employment but that “there’s good reason to expect job creation to pick up in the coming months.”
“We want to see that the gains in employment are broad-based,” Powell said. “We have a high standard for defining what maximum employment is and we think it will take some time to get there.”
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Powell has pointed to the fact that there’s still a big gap from where the labor market was before the virus hit. The report showed that the jobless rate rose for Black Americans and the number of long-term unemployed is still very elevated.