Job Losses Continue in February, but Better-than-Expected

Posted by on Mar 07, 2010 | No comment

Investors cheered following the release of the Labor Department’s employment report on Friday, which showed that the number of jobs shed in February was less-than-expected. The unemployment rate remained unchanged at 9.7.

Expectations of steeper job losses due to terrible weather conditions during the month were unfulfilled following the Bureau of Labor Statistics (BLS) report revealing only 36,000 were lost instead of a more than 100,000 job cuts feared in February.

“Now, this is actually better than expected, considering the severe storms all along the East Coast are estimated to have had a depressing effect on the numbers. And it shows that the measures that we’re taking to turn our economy around are having some impact,” said president Barack Obama. “But even though it’s better than expected, it’s more than we should tolerate.”

Friday’s report may point to a bottom-settling in the employment carnage. Smaller jobs losses may eventually lead to small gains in coming months, according to projections contained in the president’s budget to congress.

Some private sector analysts went on record that they agree with the president.

“We have to conclude that this is a fairly strong employment report and that we will see a significant increase in employment and hours worked in the March release,” said RDQ Economics in a note to clients.

“The job market will look much better this spring as the Census (Bureau) ramps up hiring for the 2010 census. Several hundred thousand temp jobs will be created between March and May. The real test for the job market will come this summer and fall when the census temp jobs end,” said Moody’s economy.com chief economist Mark Zandi. “If private businesses haven’t begun to hire by that time, then the job market will weaken again.”

Although the jobs picture remains tenuous as it may appear in aggregate, details within the jobs data reveal that manufacturers added approximately 1,000 workers for the second straight month, not significant but encouraging to same analysts.

“Of the 21 manufacturing industries, more than half (13) reported modest gains, totaling 19,300 jobs. These increases were largely offset by declines in seven industries, led by motor vehicle employment,” David Huether, chief economist for the National Association of Manufacturers, wrote in his blog Friday. “Given the underwhelming report earlier this week on January factory orders, a more robust upturn in manufacturing output and employment in the coming few months is not likely in the cards.”

The service sector led the way in positive trends emerging under the headline number, which showed a 42,000 jobs increase for February. Professional and business services sector added 51,000 jobs.

Job gains in these categories were overshadowed, however, by disappointing data showing construction loss approximately 64,000 jobs, while goods production job losses reached 60,000. Government shed 18,000 jobs as states wrestle with record budget deficits.

Revisions to prior BLS data include a downward revision of December’s job loss to 109,000, not 150,000 initially reported in January; and a revision of January’s job loss to 26,000 from 20,000 initially reported last month.

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