Gain of 379,000 jobs lifts hopes, but analysts see recovery as fragile

WASHINGTON — The U.S. economy added 379,000 jobs in February, a level well above the pre-pandemic rate of growth that surpassed analysts’ estimates and bolstered hopes about more positive growth through the year as the public-health crisis lessens.

The unemployment rate dropped a 10th of a percentage point to 6.2%.

It was the most positive jobs report since October, after two months of disappointing numbers, including the loss of an estimated 306,000 jobs in December. And it comes in the midst of final negotiations over President Joe Biden’s $1.9 trillion stimulus package, which is being debated in the Senate in Washington’s polarized climate.

But economists said that while better than expected, the report shows just how much work remains for the Biden administration and lawmakers around the country.

“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.

White House officials said the jobs report underscored the need for the stimulus package. Press secretary Jen Psaki said the report highlighted how deep the pandemic jobs deficit still is.

White House Chief of Staff Ron Klain noted Friday 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.

Last month’s 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 were from restaurants, bars and other food-service establishments. Employment in the sector still badly lags 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 jobs; 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 likely was 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.

The job gains last month were sharply uneven. The unemployment rate among white workers fell slightly, to 5.6%, and among Hispanics, to 8.5%. Among Asians, it dropped to 5.1%. But for Black Americans, it jumped from 9.2% to 9.9%.

Women fared slightly better than men, with unemployment dropping among women from 6.3% to 6.1%, while men’s unemployment fell one-tenth of a percentage point to 6.3%. Women have left the labor force at a significantly higher rate than men: about 2.5 million women, compared with 1.5 million men.

CLIMBING OUT OF HOLE

Daniel Zhao, senior economist at Glassdoor, noted that the jobs growth in industries like leisure and hospitality likely was because those sectors were recovering from job losses in December and January and was less about making gains back into the initial pool of jobs lost early 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.”

Still there are increasingly more 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, as forecasts have improved about the supply of vaccines that will be available to the country before June. Coronavirus cases, hospitalizations and deaths have fallen significantly from their peak in January, though concerns remain about another upswing as new variants circulate and exhaustion grows over what will soon be more than a year’s worth of preventive measures and restrictions.

“The best stimulus is vaccination,” said Constance Hunter, chief economist at KPMG. “My hope is that we don’t backslide on the virus” as states reopen.

On the economic side, retail sales blew projections out of the water in January. The Fed’s Beige Book, which was put out earlier this week, found that businesses remain optimistic about the rest of the year. The Institute for Supply Management 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.

BUSINESSES OPTIMISTIC

According to Census Bureau data, the numbers of businesses reporting a large negative effect from the pandemic inched down to its lowest levels of the pandemic in the last two weeks of February, just under 30%, as did the number of businesses reporting that they decreased the number of employees

The number of businesses saying they added employees in February, about 5.5%, was almost double the rate over the past two reports, from the end of December into January.

Stefan Coker, the owner of What’s Pop-In, a gourmet popcorn company in Buffalo, N.Y., said people seem increasingly comfortable about shopping in person. His online sales also are growing, and he hopes to strike a deal with the grocery chain Wegman’s to sell in those stores.

To meet growing demand, he is moving into a larger storefront with warehouse space, and he plans to hire two or three more workers in the coming months.

“I’m seeing a major difference now in in-store sales,” Coker said. “Walk-in traffic has doubled. It’s been amazing to see.”

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.”