As restaurants hire and COVID cases fall, the U.S. economy gains 379,000 jobs in February
Hiring rebounded sharply in February after a two-month slump with employers adding 379,000 jobs as falling COVID-19 cases fell and easing business restrictions offset harsh winter weather across much of the country.
Restaurants and bars accounted for most of the job gains.
The unemployment rate fell from 6.3% to 6.2%, the Labor department said Friday.
Economists surveyed by Bloomberg expected about 200,000 employment gains, according to their median estimate.
After stalling in December and January while the pandemic spiked, job growth is projected to increasingly pick up steam in coming months amid declining infection rates, loosening constraints on businesses and growing vaccinations. About 16% of the population already has been vaccinated and another 25% have immunity as a result of prior infection, economist Ian Shepherdson of Pantheon Macroeconomics estimates. Yet the crisis will still leave a legacy of hundreds of thousands closed businesses and a few million jobless workers.
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Investors cheered the better-than-expected report. The Dow Jones Industrial Average jumped as much as 300 points in early trading before paring gains to about 100 points.
Restaurants and bars add most jobs
Last month, leisure and hospitality added 355,000 jobs, including 286,000 at restaurants and bars, but employment in the hardest-hit industry is still down 9.5 million compared to pre-pandemic levels. Professional and business services added 63,000 jobs, including 53,000 at temporary help services. Many firms are bringing on contingent workers to handle a pickup in activity until they’re more confident the economy has regained its footing.
Health care added 46,000 jobs; retail, 41,000; and manufacturing, 21,000.
Construction shed 61,000 positions as a result of the bad weather. And public education cut 69,000 jobs on a seasonally adjusted basis, though the losses largely reflect the distortion of normal seasonal hiring and layoffs at schools during the pandemic, Labor said.
The number of Americans on temporary layoff fell by 517,000 to 2.2 million as businesses continued to rehire furloughed workers. About 22% of unemployed workers said they were on temporary layoff, down from 27% the previous month. That means many workers could still be brought back to their old jobs.
The number of people permanently laid off was unchanged at 3.5 million but the figure is 2.2 million above pre-pandemic levels and represents a longer-lasting scar for the economy.
“We anticipate improving health conditions, expanding vaccine distribution, and generous fiscal stimulus will form a powerful cocktail that lifts (economic) growth to 7% in 2021,” Oxford wrote in a note to clients.
Yet the surge would still leave payrolls about 3 million short of pre-pandemic levels, down from the current 9.5 million shortfall. Also, the number of Americans unemployed six months or longer rose by 125,000 last month to 4.1 million and is up from just 1.1 million before the crisis. Such workers are considered long-term unemployed and typically have a tougher time landing new jobs because their skills erode or employers are simply more reluctant to bring them on.
And more than 4 million people have stopped working or looking for jobs over the past year because they're discouraged, caring for children or ick relatives, or other reasons.
Amanda Hobbs, of Hooksett, New Hampshire, has experienced both the labor market’s challenges during the pandemic and its revival. She had to leave her job in the accounting department of a car dealership a year ago because the daycare centers for her two pre-school age kids closed and her employer wouldn’t let her work at home.
But with the housing market booming, she recently landed a part-time position as an executive assistant for a local real estate agency that’s allowing her to work remotely.
“It was very hard for me to find a job,” she says. “I can’t go into a place right now” because of child-care responsibilities
The government's stimulus measures are intended to limit enduring damage to the economy, with the $900 billion COVID relief package, passed by Congress in December, helping boost activity last month. The legislation extended unemployment benefits for 11 million people, sent $600 checks to most households and renewed the Paycheck Protection Program’s forgivable small business loans.
More stimulus for jobs, economy
A $1.9 trillion relief package, which is expected to be passed by Senate this month, will only further juice the rebounding economy this spring.
In February, the number of employees working at small businesses rose for the first time since October, according to Homebase, which supplies payroll software to small firms. And early last month, the number of restaurant diners increased to the highest level since November, according to Open Table, an online restaurant reservation service, and Capital Economics.
The snowstorm that devastated southern states such as Texas came too late to dampen Labor’s employment survey, which is conducted during the week that includes the 12th of each month, Oxford says. But harsh weather earlier in the month -- including snowstorms in the Northeast and frigid temperatures in the Midwest and Plains states – might have tempered payrolls in construction, according to Oxford and Capital Economics.
COVID variant is new threat to economy
The nation has recovered 12.9 million, or 58%, of the 22.4 million jobs wiped out in the health crisis as restaurants, shops and other businesses shuttered by the coronavirus outbreak have reopened or ramped up. Oxford Economics is forecasting 7 million job gains this year while unemployment falls below 5%.
The chief threat to a booming economy by midyear is the rapid spread of a COVID variant that could outrun the drop in cases, Shepherdson says.
Contributing: Jessica Menton