In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy analyzes the latest jobs report. The private sector added 222,000 jobs in February, the largest increase in 10 months and second-strongest gain since the recovery began. Is the economy out of the woods or is this just another false start?
Driven by solid private sector gains, the February jobs report provided clear indications that the economy is moving in the right direction. According to the Bureau of Labor Statistics, the nation’s private sector added 222,000 jobs in February on a seasonally-adjusted basis, the largest increase in 10 months and second-strongest gain since the employment recovery began in March 2010. In total during the last three months, the private sector added 457,000 jobs, the strongest three-month performance in more than four years.
While the overall numbers are positive, it is the breadth of the private sector job growth that gives further cause for optimism. Professional-and-business services (+47,000), health care (+34,000), construction (+33,000), manufacturing (+33,000), transportation-and-warehousing (+22,000) and eating-and-drinking places (+13,000) all posted solid job growth in February. This diverse collection of industries signals that the recovery is becoming more broad-based. The positive manufacturing trend is particularly noteworthy, with a total of 189,000 jobs added in the last 12 months alone.
In contrast to the positive private sector trends, government payrolls continued to decline in February. State (-12,000) and local (-18,000) governments both shed jobs in February, as budget shortfalls continue to take their toll.
In addition to the solid private sector job growth, the nation’s unemployment rate fell to 8.9 percent in February, the lowest level in nearly two years. In reality, the jobless figures are not strictly comparable to pre-2011 levels, due to new population controls implemented by the Census Bureau in January. However, on a psychological level, an unemployment rate that begins with the number ‘8’ is much more palatable to consumers than one that begins with a ‘9’ or ‘10’. So regardless of how it compares with previous periods, this month’s jobless number is likely to have a positive impact on the confidence of American households.
So what should we expect in the months ahead? The National Restaurant Association projects job growth to average over 200,000 per month for the rest of the year, as the economic recovery becomes more entrenched. At the same time, we will most likely see a corresponding uptick in the unemployment rate at least initially, as more and more individuals jump back into the labor market as new jobs become available. Overall, the road to recovery is getting smoother, and the Great Recession is becoming more distant in the rear-view mirror.
Monthly Private Sector Job Growth
Source: Bureau of Labor Statistics; figures are seasonally-adjusted