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Friday, March 7, 2014
Weak Recovery Continues as Unemployment Rate Stagnates
from the Wall Street Journal
by Ben Leubsdorf and Jeffrey Sparshott
WASHINGTON—The U.S. labor market in February picked up from recent months, though growth remained measured and the unemployment rate stubbornly high.
U.S. nonfarm payrolls increased by a seasonally adjusted 175,000 in February, the Labor Department said Friday. Revisions by the agency showed the economy added slightly more jobs in recent months than previously believed. Employers added 129,000 jobs in January, up from 113,000, and 84,000 jobs in December, up from 75,000.
Economists surveyed by Dow Jones Newswires had projected payrolls would rise 152,000 in February and the unemployment rate would fall to 6.5%.
U.S economic growth accelerated in the second half of 2013 but has shed momentum in recent months. Gross domestic product grew at a seasonally adjusted annual rate of 2.4% in the fourth quarter, down from its 4.1% pace in the third quarter, according to the Commerce Department. Many economists expect growth to slow further in the first quarter. The forecasting firm Macroeconomic Advisers projects GDP will grow at a 1.5% pace, and Barclays Capital predicts 2.2% growth in the first three months of the year.
The recent stretch of mixed economic data, including weak retail sales and a drop in factory output, has been blamed in part on harsh winter weather. The weather may have distorted Friday's reading on jobs, too. Last month's household survey, one component of the jobs report, coincided with a mid-February storm that brought ice and snow to much of the eastern U.S.
It's far from clear if weather is the primary culprit or if the U.S. economy is slowing down in earnest. "A number of data releases have pointed to softer spending than analysts had expected," Federal Reserve Chairwoman Janet Yellen told lawmakers last week. "That may reflect in part adverse weather conditions, but at this point it is difficult to discern exactly how much."
The Fed has been scaling back its bond-buying program, which aims to stimulate the economy by lowering borrowing costs. It now stands at $65 billion per month and policymakers have signaled they plan to pare it in $10 billion increments this year as long as the economy continues to improve.
The central bank's policy-making committee is scheduled to meet March 18-19. Federal Reserve Bank of New York President William Dudley said Thursday that "the threshold is pretty high" for changing course and "the outlook would have to change in a material way relative to my expectations."
Payrolls grew an average of 129,000 a month in December, January and February, slower than the average for the last year of 189,000 a month.
The construction sector, which can be sensitive to the weather, added 15,000 jobs in February after adding 50,000 in January. Manufacturing firms added 6,000 jobs last month, retailers cut 4,100 jobs and employment in the leisure and hospitality sector rose by 25,000 jobs.
Professional and business services employers added 79,000 jobs in February. Employment in the health-care industry rose by 9,500, the third straight month the Labor Department said the field remained nearly flat.
The labor force participation rate held steady at 63% in February. The metric remains at historically low levels.
The number of Americans who have been out of work for 27 weeks or longer rose in February by 203,000 to 3.8 million. Federal funding for extended unemployment benefits expired at the end of December, which could push many of the long-term unemployed either to take jobs or drop out of the workforce entirely.
The unemployment rate rose to 6.7% last month, but a broader measure that includes people working part-time who want a full-time job and others who are marginally attached to the workforce fell to 12.6% in February. It stood at 12.7% in January and 14.3% a year ago.