But economists said that while better than expected, the jobs report showed just how much work remains for the Biden administration and lawmakers around the country as the economy continues to climb out of the employment deficit left by the pandemic.
“Obviously it’s great that job gains beat expectations and they are faster than pre-covid average monthly gain,” said Julia Pollak, a labor economist at ZipRecruiter. “That being said, we’re still in a very very deep hole, and these are not the numbers you would hope to see in a robust recovery.”
Job growth would need to pick up significantly to regain the approximately 9.5 million jobs lost since last year. When estimates for how much the labor market would have grown in the previous economy are included, that hole is even larger, as many as 12 million jobs, according to some economists.
White House officials said the report underscored the need for the stimulus package, with Chief of Staff Ron Klain noting that at the current pace, it would take the economy until April 2023 to get back to the employment levels it had in February 2020.
“The rescue plan is absolutely essential to turning this around, getting kids back to school safely, giving a lifeline to small businesses and getting the upper hand in COVID,” President Biden said Friday, noting that some 400,000 small businesses have shuttered during the pandemic. “All those empty storefronts are not just shattered dreams, they are warning lights going off in state and local budgets."
The gains in February were driven by large increases in the leisure and hospitality sector, which added 355,000 jobs, as coronavirus-related restrictions eased over the course of the month in many jurisdictions.
Of these jobs, about 286,000 came from restaurants, bars and other food service establishments. RSM chief economist Joseph Brusuelas noted that leisure and hospitality netted only 22,000 jobs when the gains were stacked up against losses from the previous months amid closures and surging coronavirus cases.
And employment in the sector still badly lags behind its pre-pandemic level: There are 3.5 million fewer jobs in the industry than there were one year ago.
Other sectors gaining jobs included temporary help services, which added 53,000 jobs, health care and social assistance, which added 46,000 positions, and retail, which added 41,000 jobs.
Clothing stores suffered, losing 20,000 jobs. Manufacturing ticked up by 21,000, while construction fell by 61,000, a decline that was probably driven in part by severe winter weather, the Bureau of Labor Statistics noted.
Government workers were hit hard, losing 37,000 jobs at the local level and 32,000 education workers at the state level, data that some said reflected the need for more aid to help shore up budget shortfalls related to the pandemic.
“We believe that it’s a direct result of the fact that we were unable to get aid to states and cities and towns and schools,” said Lee Saunders, president of the American Federation of State, County and Municipal Employees. “That’s why we’re continuing to fight and hopefully we get some money moving to those entities when the Senate acts. Its unconscionable that we’re seeing these layoffs."
The $1.9 trillion aid package passed by the House includes $350 billion for state and local governments, an issue that faced major opposition from congressional Republicans during the last round of stimulus negotiations despite enjoying support from some state and local GOP officials.
Daniel Zhao, senior economist at Glassdoor, noted that the job growth in industries like leisure and hospitality was probably more about those sectors recovering from job loss in December and January, and less about regaining jobs lost earlier last year.
“Today’s report is showing green shoots of the recovery poking out of the snow,” said Zhao. “But the growth is a little bit weaker than headline numbers imply. … It’s good that these businesses are recalling workers, but it points more to the fact that these businesses are crawling out of the hole from December, rather than the hole that opened up in April and May. It doesn’t necessarily look like incremental growth.”
Drew Matus, an economist and chief market strategist at MetLife Investment Management, said he was concerned that the average hours worked for all workers declined by about 18 minutes a week — hundreds of thousands of jobs’ worth of hours when multiplied by the entire working population.
“The scale of the decline is quite big,” he said. “This report tells me things are looking up if vaccine administration continues, but we’re still not out of the woods yet.”
Still, there are increasingly optimistic signs about the economy and the public health crisis that delivered such a shocking blow to it last year.
The rate of vaccinations is picking up across the country, with improved forecasts about the supply that will be available before June. Coronavirus cases, hospitalizations and deaths have come down significantly from their peak in January, though concerns remain about another upswing as new variants circulate and exhaustion grows after what will soon be more than a year’s worth of preventive measures.
On the economic side, retail sales blew projections out of the water in January. The Fed’s “beige book", which came out earlier this week, found that businesses remain optimistic about the rest of the year. The ISM index, which measures manufacturing activity, rose to its highest level in three years last month, even as a global semiconductor chip shortage hurt production at some plants.
According to Census Bureau data, the share of businesses reporting a “large negative effect” from the pandemic reached its lowest level in the last two weeks of February, just under 30 percent, as did the percentage of businesses reporting that they had cut staff.
The share of businesses saying they added employees in February, about 5.5 percent, was almost double the rate over the last two reports, from the end of December into January.
Many economists are expecting the labor market to make much bigger gains once more aid is authorized in Washington and vaccinations reach a broader slice of the public.
“The report will neither persuade the Federal Reserve to alter its path of accommodative monetary policy, nor should it be used as an argument to pull back on the Biden administration’s proposal for $1.9 trillion in fiscal stimulus,” said Brusuelas, the RSM economist. “For now, the composition of hiring and unemployment suggests that we have yet to get past the deep freeze in the economy caused by the pandemic.”
The report covers the first full month of the Biden presidency. Overall, the economy still has 9.5 million fewer jobs than it did before the pandemic, and economists warn that the unemployment rate would be higher if not for more than 4 million people who have left the workforce over the past year. Women have left the labor force at a significantly higher rate than men: about 2.5 million women, compared with 1.5 million men.
Federal Reserve Chair Jerome H. Powell said last month that the real unemployment rate is probably closer to 10 percent.
Economists and public health experts are more optimistic about the coming months as the rate of vaccinations accelerates.
February saw decreasing caseloads and more reopenings for businesses like restaurants and bars in states like California and New York. But many industries, such as tourism and hospitality, now employ far fewer workers than they did before the pandemic.
Jeff Stein contributed to this report.