Great news on jobs: Unemployment rate falls to 7.7%, 236k added to payrolls

March 8, 2013

The latest report on the state of the U.S. job market offered good news all around, the best reading in months on the state of the economy.

Jobs? There were 236,000 more of them on U.S. employers' payrolls in February than in January. The unemployment rate? Down to 7.7 percent, from 7.9 percent. Wages? Private-sector pay rose 0.6 percent as people both worked more hours and at a higher hourly wage.

 

 

The details of the Labor Department's report, released Friday, are not uniformly rose-colored. For example, part of the decline in unemployment was caused by the labor force shrinking and people no longer looking for work. And the numbers cover a time before the automatic government spending cuts known as the sequester took effect, which will have hard-to-predict impacts on the numbers for March and beyond.

But overall, it was a sign that the pieces could be in place for the U.S. economy to finally jump into a faster gear after nearly four long, slow slogging years out of recession.

"It's an outstanding report," said Craig Alexander, chief economist at TD Bank Group. "Not only are the headlines good but the details are good as well. You very quickly run out of superlatives in this payroll report."

The stock market was up only slightly Friday, as investors were both relieved to see positive economic signs but assumed that good economic news could mean that Federal Reserve easing efforts will end sooner than they would if the news had been bad. The Standard & Poor's 500 stock index was up 0.1 pecent at 10:20 a.m., and the interest rate demanded on 10 year U.S. Treasury bonds was up to 2.04 percent, from 1.99 percent Thursday.

The numbers offer ample support for the idea that some of the headwinds that have held the economy back since the technical end of the recession in mid-2009 are finally abating. The construction sector added a whopping 48,000 jobs, the most in a single month since March 2007. That is a sign that the housing market is finally surging enough to start to put construction laborers back to work.

And the American consumer, having made progress reducing debt burdens over the last several years and benefiting from higher prices in the stock market, apparently kept spending enough that retailers added 23,700 jobs. That despite an increase in payroll taxes Jan. 1 that economists have feared could wallop consumer spending.

Interactive: Key jobs statistics

A third major area for job creation was professional and business services, which added 73,000 jobs, with the strongest gains in a category that includes workers for temporary employment services; that could presage more improvement in the private sector to come, as companies often bring on temporary workers before adding to their permanent staff.

The data show a continued schism between the private sector, which is growing nicely, and government, which is still shrinking its employment level -- even before the sequester took effect. The federal government excluding the post office shed 4,200 jobs in February, state governments cut 8,000 jobs, and local governments cut 2,000.

Robert Dye, chief economist of Comerica bank noted that auto sales and home sales data are both pointing toward economic growth, suggesting the private sector is so far powering through despite tighter fiscal policy. "If we can keep the labor market momentum up for the next few critical months, as fiscal tightening continues, many other good things will happen," Dye said in a research note. "Solid hiring is the antidote to fiscal tightening. We got a dose of the antidote in February. More is needed."

Weigh in: If you're job-hunting, does the latest report make you feel more optimistic?

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