Half a Million Jobs Created in February
The nation’s economy continued to confound the experts last month by creating 531,000 new payroll jobs--twice as many as expected, the Labor Department reported Friday.
The overall unemployment rate fell to 5.6%, the lowest level since 1979.
Economists had widely predicted that the economy, still shaking off the effects of last year’s Oct. 19 stock market crash, would slow sharply in the first three months of this year. They had forecast that the unemployment rate would increase slightly from the 5.7% registered in December and January.
“What did we do? Acquire a small country?” demanded David Levine of Sanford C. Bernstein & Co. in New York, who regarded the new data as vindication for his optimistic economic outlook. “The post-crash consensus has consistently been too pessimistic, and it looks now as though it continues to be that way.”
“It’s a big number. It’s startling. It’s astounding,” said Donald Straszheim of Merrill Lynch, New York. “I’m about as surprised by this as I’ve been in a long time.”
Straszheim had expected about 250,000 new payroll jobs and an unemployment rate of 5.8%. This would have been close to the monthly average since the beginning of last year but well below the monthly average of 377,000 since last October’s market crash.
February’s figures were not the only good news. The Labor Department, which had reported a month ago that only 107,000 new payroll jobs had been created in January, revised that figure to 174,000.
‘Best Indicator of Economy’
The White House took satisfaction in the new data. “Both the February increase in employment and the decline in unemployment exceeded the expectations of private forecasters,” White House spokesman Marlin Fitzwater said. “Jobs are the best indicator of a sound economy.”
But even Levine, who has remained bullish on the economy since the October crash, admitted that job growth could not maintain February’s pace. “If you were to hold a gun to my head and force me to tell you if I thought this reflects what’s really going on, I’d have to say no,” he conceded. “The economy is not going to grow 9% this year, which is what this month’s numbers suggest.”
David Wyss of Data Resources Inc., a Lexington, Mass., forecasting firm that has predicted very slow growth for early 1988, said: “I don’t understand what the economy is doing now.”
Construction Jobs Up
New home sales declined 9% in January, he said, yet the Labor Department reported 107,000 new construction jobs in February. Retailers are complaining about sagging sales, he added, yet there were 111,000 new jobs in retail sales.
Wyss also wondered about a 201,000 increase in general service payroll jobs--including business and health but excluding wholesale, retail, transportation and government. “It’s hard to make sense out of it, or where it was,” he said. “Was it lawyers and doctors? Or was it hairdressers?”
A separate Census Bureau survey of households found that a large proportion of recent employment growth has come in relatively high-paying executive, administrative and managerial jobs. Over the last year, the Labor Department commented, such jobs have “accounted for more than a third of the 3-million growth in total civilian employment.”
The 5.6% unemployment rate takes into account both civilian and military employment. The civilian unemployment rate also declined by 0.1% in February, to 5.7%.
By either measure, the percentage of jobless Americans was at its lowest since May, 1979. That in turn was the only month since 1974 during which total unemployment was as low as 5.6% and civilian unemployment as low as 5.7%.
Total Jobless 6.9 Million
During February, total unemployment fell to slightly more than 6.9 million, the lowest since early 1980, and the percentage of the nation’s civilian population holding jobs increased to 62.2%, the highest proportion ever.
In California, civilian unemployment was 5.4%, up from 5.1% in January and 5.2% in December, but well below the 5.8% rate of last October.
Nationally, there was little change in February in the unemployment rates for various segments of the population. Unemployment was 4.9% for adult men, 5.2% for adult women and 15.4% for teen-agers. Unemployment among whites was 4.8%; for blacks it rose by 0.4 of a percentage point to 12.6%. Unemployment among Latinos jumped to 8.3% from 7.2% in January.
THE JOBS PICTURE: LOOKING BRIGHT Unemployment rate and new jobs created each month since January, 1987. 1987
Unemployment rate New Jobs January 6.6% 352,000 February 6.5 231,000 March 6.4 179,000 April 6.2 269,000 May 6.2 110,000 June 6.0 110,000 July 6.0 308,000 August 5.9 149,000 September 5.8 159,000 October 5.9 549,000 November 5.8 302,000 December 5.7 327,000 1988 January 5.7 174,000 February 5.6 531,000
SOURCE: Bureau of Labor Statistics.
