Labor Market Thaws on Best Showing Since October
The economy added 379,000 jobs in February, the most in four months, as decreasing virus cases and a stepped-up vaccination effort led to growth in some of the industries hardest hit by the pandemic.
Economists were expecting job gains, but the scope of the increase was more than twice the median of their forecasts and beat even the most optimistic estimate of 312,000, according to Econoday, a group that analyzes economic data.
It is “an early blossom for employment” that sets the stage for a strong spring, Gregory Daco, chief U.S. economist at Oxford Economics, wrote in a commentary.
Economists have predicted the job market recovery will accelerate again this year as COVID-19 cases ease with the rollout of vaccines and another expected round of government stimulus fuels the built-up consumer demand to spend.
“It's off to the races for American workers on the back of bountiful fiscal stimulus and easing COVID restraints and anxieties,” BMO Economics senior economist Sal Guatieri wrote in a commentary. “That said...there's still a lot of wood to chop.”
The leisure and hospitality sector saw the biggest increase, with bars and restaurants accounting for more than 75% of the monthly increase (286,000 jobs). Employment also rose at hotels (by 36,000 jobs) and in the amusements, gambling and recreation sector (by 33,000 jobs). There is still a ways to go, however: There are still 9.48 million fewer U.S. jobs than before the pandemic began, and the leisure and hospitality sector accounts for more than 3.4 million of those, or over a third.
On the other hand, hard-hit retailers have recovered 2 million of the 2.4 million jobs lost in March and April of last year, including a gain of 41,000 jobs in February. And with pent-up consumer demand and savings at a record rate over the past year, the sector is set to see some of the biggest growth it has seen in the last two decades, according to the National Retail Federation.
The unemployment rate—which was 3.5% before the pandemic began—fell to 6.2% in February, marking the fifth straight month it has hovered in the 6% range. Black and Hispanic people remain among the worst off, with an unemployment rate of 9.9% and 8.5%, respectively.
With the millions of jobs that have yet to be recovered, Federal Reserve Chairman Jerome Powell continues to stress that the central bank needs to keep its vault open and its benchmark interest rate low, despite rising concerns about inflation. Powell said Thursday that “it will take some time to achieve substantial further progress” on the Fed’s target for employment.
Economists at Moody’s Analytics forecast it will take another two years until the labor market fully recovers, and even then a portion of those who have left the labor force will not return, including older workers who retired earlier than they had planned.