Unemployment Rate Holds Steady at 9.7%


WASHINGTON (TheStreet) — Employers shed fewer jobs than expected in February, though market observers continue looking for any signs of sustained employment growth.

Nonfarm payrolls fell by 36,000 during the month, and the nation's unemployment rate held steady at 9.7%, according to the Labor Department. According to consensus figures provided by Briefing.com, analysts believed 68,000 jobs would be lost from nonfarm payrolls in February, while the unemployment rate was expected to edge just higher to 9.8%.

The government also noted that last month's blizzardlike conditions around the country may have affected the data in some ways. Many economists lowered expectations ahead of the data because of the potential for weather distortions.

"Given the weather, people were expecting a worse, not better, number. I think, clearly, this number will be very well received. It bodes well for the market," said Michael James, managing director at Wedbush Morgan Securities, who anticipated a loss of over 100,000 jobs. "It continues a theme of continued improvement, albeit at a slow and steady pace."

"I don't think there's anything sharply positive about the numbers, but I think the data is good enough to keep the market up," added James, who also said these recovery signs foreshadow strength in retail.

The report will surely give both bulls and bears plenty of debate fodder. The volume of long-term unemployed, or those out of work for 27 weeks or more, edged just lower to 6.1 million from 6.3 million the month before.

Meanwhile, the so-called "underemployment" rate, which also includes part-timers looking for full-time work and a collection of unemployed who stopped looking all together, rose slightly to 16.8% from 16.5%.

Average hourly earnings rose by 3 cents to $22.46 during the month. The average hours worked in a week declined by a tenth to 33.8 hours, though that may echo winter weather closings.

The December payroll loss was revised to the upside, reflecting a loss of 109,000 jobs vs. 150,000. Meanwhile, January payrolls were revised to show a slightly wider loss at 26,000 jobs, rather than the 20,000 decline originally reported.

Employers in construction shed another 64,000 jobs, as 18,000 were dropped from rolls in the information industry. But a pickup in temporary hiring, which grew by nearly 48,000, helped offset those losses. Some economists see temporary job growth as a precursor of future jobs creation.

The overall private-service producing segment gained 42,000 jobs.

The manufacturing sector added a mere 1,000 jobs in February after gaining 20,000 in the month before. But the marginal gain reflected continued growth for consecutive months. In January, the manufacturing labor market turned positive for the first time in three years.

A pick-up in Census hiring added another 15,000 jobs, though postal worker layoffs weighed on overall government totals.

Since the recession began, the economy has lost 8.4 million jobs, leaving many to analyze the reponse of lawmakers and regulators. The Senate made a move last week in passing a $15 billion jobs stimulus package in a 70-28 vote. The House took its turn Thursday, passing a version of the bill with subtle changes. The legislation will now go back to the Senate for a final endorsement before heading to President Obama for signing.

And this week, Sen. Jim Bunning (R., Ky.) came under fire when he attempted to delay an extension on jobless benefits, citing government spending worries, only to relent later under waves of criticism.

Other encouraging labor figures have bubbled up in recent days, suggesting a recovery to come. An assessment from Automatic Data Processing showed private sector employers shed their fewest jobs in two years, while a separate report from Challenger, Gray & Christmas said layoff announcements fell 41% last month.

Big names like Merck (Stock Quote: MRK) and Oracle (Stock Quote: ORCL) continued making layoff news last month. But just this week, Kohl's (Stock Quote: KSS) said it would open several new stores, which will add more than 1,500 positions.

The Institute for Supply Management also offered separate readings on the service and manufacturing sectors, each showing labor market improvements in their respective spaces.

Initial jobless claims fell by 29,000 to a seasonally adjusted 469,000 last week. Though first-time applications for state unemployment insurance have held around 450,000 in recent weeks, they remain well below last year's highs, when initial claims approached 700,000.

But firms are also improving productivity, learning to do more with less after slashing costs and personnel and suggesting that sustained hiring may be hard to come by. A release Thursday morning showed output surged 6.9% in the fourth quarter, well beyond expectations.

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