Employers added 678,000 jobs in February — most since last summer — as the omicron variant of COVID-19 faded, prompting inactive employees to return to work and restart meals, travel and other activities.
The unemployment rate rose from 4% to 3.8%, the Labor Department announced on Friday.
Economists polled by Bloomberg had estimated that 400,000 jobs had been created last month.
Gains of 678,000 mark the strongest performance since July.
The country has so far recovered 19.9 million, or 90%, of the 22 million jobs lost at the start of the pandemic, leaving it 2.1 million jobs below its pre-level. the crisis, a gap that could be closed by the summer.
President Joe Biden, criticized by Republicans for soaring inflation, said the report shows his policies are working to “get Americans back to work”.
“This progress is the result of the new economic approach that I have spoken about in the State of the Union – developing the economy from the bottom up and in the middle. And it is the result of our success in combating COVID-19 and safe progression,” Biden said in a statement released by the White House.
The fall in unemployment came even as the number of people working or looking for work rose by 304,000, pushing the participation rate from 62.2% to 62.3%, the highest since March 2020. This means more people caring for children and others on the margins. return to a favorable labor market with rising wages.
“There’s no question people are coming back to work,” Labor Secretary Marty Walsh said in an interview. “COVID and the omicron variant are going down, vaccinations are going up…People are getting a lot more comfortable.”
Also encouraging: payroll additions for December and January have been revised upwards by a total of 92,000. January’s surprisingly robust advances, which came despite massive omicron-related worker absences, were even stronger than expected at 481,000.
“All signs show that the pandemic is loosening its grip on the jobs economy,” says Jane Oates, president of WorkingNation, a nonprofit that raises awareness of the challenges facing American workers and former chief of the Labor employment and training division.
Yet Labor’s survey came before Russia’s invasion of Ukraine sent energy prices soaring and rocked markets, developments which economists say could undermine business confidence. and hiring in the months to come.
Gas prices have soared above $5 a gallon in Southern California, a state with the highest gas prices in the nation, and the rest of the country could soon follow, according to a fuel analyst.
In February, leisure and hospitality, which includes restaurants and bars, led the overall job gains with 179,000, as food and travel rebounded. Professional and business services added 95,000; health care, 64,000; building site, 60,000; transportation and warehousing, 48,000; retail, 37,000; and manufacturing, 36,000.
About 760,000 people missed work in January due to COVID, Goldman Sachs estimates. Many sick salaried workers are still counted as employees because they receive paid sick leave, but hourly workers who are shelved are generally not counted. In total, Goldman estimates around 200,000 people returned to jobsites and payrolls last month.
Meanwhile, COVID cases have fallen more than 90% since peaking in mid-January with the omicron easing, according to Oxford Economics. This has led to a recovery in restaurants, travel and hotel occupancy, as well as increased hiring in these sectors, says Diane Swonk, chief economist at Grant Thornton.
The number of businesses open, employees working and hours worked all rose sharply in February, according to Homebase, which provides payroll software for small businesses.
The country is still grappling with severe labor shortages that have held back hiring despite record job openings. But the growing share of Americans working or looking for work indicates that the crisis may be easing somewhat.
That could reflect the delayed effects of schools reopening and the expiration of enhanced unemployment benefits in September, says Ian Shepherdson, chief economist at Pantheon Macroeconomics. The developments have likely solved childcare issues for some parents and pushed some unemployed workers to increasingly seek new jobs, he says.
The increased supply of workers appears to be moderating wage growth, according to economist Michael Pearce of Capital Economics. The average hourly wage was virtually flat last month, bringing the annual increase down to 5.1% from 5.7% in January.
The blockbuster job gains almost certainly cement the Federal Reserve’s decision to raise interest rates this month for the first time in more than three years, Pearce said. Fed Chairman Jerome Powell told Congress this week that a quarter-point hike in the near-zero short-term central bank rate is likely as the central bank moves to reduce the inflation which reached a 40-year high of 7.5%.
But the slightly tempered pay increases reduce the need for more aggressive moves in the coming months, Pearce says, such as a half-point hike in some meetings.
Contributor: Michael Collins
