Gain made on unemployment
Private-sector hiring drops rate below 9 percent
WASHINGTON – Economists say the recession ended in June 2009, but average Americans might look back on February 2011 as the first sign of hope.
The Labor Department said the economy added 192,000 new jobs last month, a sharp increase that helped trim the unemployment rate to 8.9 percent – the first time it has been below 9 percent in nearly two years.
The nation’s economy finally appears to be reaching “escape velocity,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. He pointed out that Friday’s solid jobs report followed encouraging data on auto sales, chain store revenue and other economic barometers.
The missing piece has been the large-scale hiring needed to repair the severe damage to the job market from the deep recession, and that appears to be under way.
“It’s no longer appropriate to call this a jobless recovery,” Rupkey said.
But although the nation’s job engine appears to be revving, rising oil prices could apply the brakes. Volatility in that market, sparked by turmoil in the Middle East and North Africa, continues to spook many on Wall Street. A jump in the price of oil Friday to a 2 1/2-year high led to an 88.32-point drop in the Dow Jones industrial average.
Rising oil prices are raising the specter of inflation, which is stirring concern that central banks might tighten interest rates and stunt the global recovery. What’s more, higher prices at the gasoline pump could dampen consumer demand for other goods, economists warned.
“Gas is going up. Food prices have jumped again. You’re sitting there with your unemployment check and everything is so expensive,” said Karen Flynn, 62, of Santa Clara, Calif., an unemployed high school teacher. “The minute you get in your car, it’s costing you money.”
Nigel Gault, chief U.S. economist for IHS Global Insight, noted that the February jobs report and much of the recent positive data don’t reflect the surge in gas prices. But he said the economy’s positive momentum “suggests the oil shock may dampen things a little bit but not derail the recovery.”
The unemployment rate has plunged nearly 1 percentage point in three months – it was 9.8 percent in November – for the biggest such drop since 1983. That is helping spread optimism about the recovery.
Private-sector hiring drove February’s increase. The nation added 222,000 new private-sector jobs, with gains in manufacturing, construction and several service areas, including health care. The government work force shrank by 30,000 in February, driven mostly by cuts by states and municipalities.
Friday’s report was a marked improvement over the 63,000 new jobs added in January.
There’s still a long way to go. A broader measure of unemployment, which includes people working part time because they couldn’t find full-time jobs and workers who have given up looking for jobs, stood at 15.9 percent in February. Still, that was down from 16.1 percent in January and 17 percent in November.