Unemployment rate stays at 9.7% despite challenges last month


In a pinch of bright news for the economy, the snowstorms that paralyzed transportation and shut down thousands of businesses on the East Coast last month did far less damage than expected to the nation’s labor market, enabling the unemployment rate to hold steady at 9.7%.

Some economists had forecast that the blizzards would result in a setback on the jobs front, with unemployment jumping and payroll losses reaching 75,000 or more.

Certainly recovering from the worst recession in more than half a century does indeed remain slow and uneven. And by any standard, the ranks of people who have been out of work for six months or longer remain extraordinarily high; 4 out of 10 unemployed, or 6.1 million workers, fall into this category.

But in February the nation’s payrolls fell by only 36,000, the Labor Department reported Friday, and some analysts said the economy actually might have added jobs were it not for the bad weather that shut down businesses and transportation for several days in the mid-Atlantic region.

Revised data said the economy shed 26,000 jobs in January and 109,000 in December, when the unemployment rate was 10%. Including February, payrolls have fallen in 25 out of the last 26 months.

“The job market appears to be on the mend even though it’s a fairly slow process,” said Gary Burtless, a former Labor Department economist and now senior fellow at the Brookings Institution in Washington. In particular, Burtless was encouraged that the number of long-term unemployed declined slightly last month after a long string of rapid increases.

The latest snapshot of the labor market, which for most people is the single most important economic indicator, came against a backdrop of mixed reports recently on key engines of the economy.

The housing market has tailed off after a burst of sales in the second half of last year driven largely by the first-time home buyer’s tax credit. Construction remains in the doldrums as high vacancies and sluggish rents continue to depress office, retail and apartment building.

And consumer confidence has been slow to come back, raising concerns about the durability of an economy that relies heavily on personal spending.

Yet business investment for equipment and software has been rising, and manufacturing is growing again.

U.S. economic output expanded at an annualized rate of 5.9% in the fourth quarter, although most of that was due to short-term boosts related to businesses restocking inventories that had been allowed to dwindle during the recession -- as well as to fiscal stimulus that has been supporting both business and consumer spending.

On balance, professional forecasters are expecting economic growth to drop to about 3% in the first quarter and for the balance of the year -- a relatively slow pace that won’t add much fuel to hiring.

Employers have been reluctant to hire because of weak sales, tight credit that’s restrained expansion, increased productivity -- more goods from current workers -- and uncertainties about government policies on healthcare, energy and taxes.

All that has prompted fears that the broader economy could backslide.

“In terms of self-sustaining growth in the economy, it’s hard to see how you can do that without creating jobs,” said Dean Baker, director of the Center for Economic and Policy Research in Washington. Despite the better-than-expected employment report for February, he noted, the economy needs to add, on net, about 125,000 jobs or so just to keep pace with the labor growth and hold the jobless rate from rising.

The United States has lost 8.4 million jobs since December 2007.

Last month, the construction industry dropped an additional 64,000 jobs. Analysts viewed many of those as victims of the weather. The Labor Department’s payroll jobs data are seasonally adjusted, but those statistical adjustments are based on past average fluctuations, and last month’s snowstorms were hardly normal.

But Ken Simonson, chief economist at the Associated General Contractors of America, said he believed the industry would have lost about that many jobs last month even if the storms had not paralyzed activity in the East.

“I do expect a lot more [federal economic] stimulus money to turn into construction jobs in the coming months,” he said. But “we’re not yet at bottom.”

About 1 out of 4 construction jobs has been lost during the recession, and unemployment in the industry now hovers at about 27%.

Friday’s report did reveal some positive trends. Manufacturers added 1,000 jobs last month -- positive but tiny after a 20,000 gain in January, which was the first upturn after factory payrolls plunged by more than 2 million during the last two years of the recession.

Some of the gains have come from General Motors, Caterpillar and other companies that have recalled laid-off workers lately.

The temporary-help industry, widely seen as a harbinger of broader hiring, expanded by an additional 48,000 jobs in February, bringing to 284,000 the number added since September.

Weather probably wasn’t a major factor in the Labor Department’s unemployment numbers, which are based on a separate national survey of households that counts as employed those who have jobs but say they missed work because of weather factors, even if they were unpaid.

This survey, which includes self-employed people, showed 308,000 more people working in February than the previous month.

Analysts regard the payroll data as more reliable. But both sets of data have weaknesses, especially at turning points in the economy.

Forecasters are projecting the unemployment rate to rise in the coming months. A separate Labor Department measure of unemployment and underemployment that includes part-time workers who want full-time jobs rose to 16.8% last month from 16.5% in January.

Melody Boyd of Los Angeles has been officially out of work since August 2008. Her unemployment benefits expire near the end of the month. But next week, Boyd said, she has an interview for a job in the accounting section of a healthcare firm. It’s her first interview in months.

“I have a spark of hope,” she said.