Economy adds 175,000 jobs in February

The U.S. economy added a solid 175,000 jobs in February, despite harsh winter weather that many analysts expected would curtail hiring, according to government data released Friday morning.

The report from the Labor Department showed the job market has steadily improved since hiring plunged at the end of last year. On Friday, the government actually increased its estimate for job creation in December and January. But the unemployment rate ticked up to 6.7 percent last month as more people entered the labor force to look for jobs. The number of long-term unemployed -- those who have been out of work for six months or more -- rose by 203,000 to 3.8 million.

“The overall impression is that things did slow down, but not as drastically as the December and January data suggested,” said Kevin Logan, chief U.S. economist at HSBC.

 

The slowdown in hiring this winter, coupled with recent weak data from the housing and manufacturing industries, has raised questions about the strength of the nation’s economic recovery. The strong growth enjoyed during the second half of last year has not carried into 2014, despite predictions that this would be a breakout year for the economy.

Some analysts have argued that the data was skewed by the record-setting extreme winter. The economy has been buffetted by below-zero temperatures, historic snowfalls and disruptive ice storms. More than half of the nation's lower 48  states were covered in snow early this week, the most since NOAA began tracking the data a decade ago.

 


Snow cover and depth on March 5 (NOAA)

 

But the job growth in February complicates that theory. A major snowstorm hit much of the eastern United States just before Valentine's Day, when the government was surveying businesses about their hiring plans. That was expected to throw a wrench in February's data, yet it still beat Wall Street's expectations.

“This is a good, resilient report, especially given the weather," Labor Secretary Thomas Perez said in an interview Friday. "It shows that the economy continues to move in the right direction.”

U.S. stock markets opened higher on the news but gave up much of those gains by early afternoon. The Dow Jones Industrial Average was barely in positive territory, up just one-tenth of a percent. The broader Standard & Poor's 500-stock index and the tech-heavy Nasdaq were in the red.

The stronger outlook for the recovery at the end of last year prompted the Federal Reserve to begin scaling back the amount of money it is pumping into the economy. The Fed has bought more than $1 trillion in bonds to help push down long-term interest rates.

In congressional testimony last week, Fed Chair Janet Yellen said the central bank would be “attentive to signals” that the recovery could be faltering, but that it is still trying to determine how much weather has affected the data. Other central bank officials have suggested that the bar for changing plans is high. In an interview with The Washington Post, Atlanta Fed President Dennis Lockhart said he expects the data will fluctuate.

“The variability that comes sort of normally from quarter to quarter or month to month is not likely in my mind to justify a change,” he said Thursday. “It would have to be fairly material.”

Meanwhile, the Fed is also debating changes to its guidance on when it will increase the target for short-term interest rates. Officials had vowed to keep them at zero at least until the unemployment rate hit 6.5 percent. The Fed is almost certain to discuss the issue when it meets in Washington later this month, and officials could drop that reference altogether in favor of more generic language.

 

 

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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