February hiring figures suggest recession is over
By Leigh Strope
Associated Press
WASHINGTON — U.S. companies added jobs for the first time in seven months in February, helping push down the unemployment rate to 5.5 percent in the strongest signal yet that the recession is over.
"It's over. This is it," said Mark Zandi, chief economist for Economy.com. "This is the final nail in the recession's coffin."
But economists also cautioned that the pain hasn't ended for people looking for work.
The Labor Department reported yesterday that businesses added 66,000 jobs in February, breaking a string of losses that had averaged 146,000 a month since the recession started in March 2001. It was the largest employment increase since February 2001.
Warm weather, retail hiring and reopening automobile factories all contributed to the February increase, which probably won't be sustained.
"The 66,000 job increase overstates the case for the economy's recovery, but it clearly makes the case that the economy is recovering," Zandi said.
The report sent stock prices higher. The Dow Jones industrial average closed up 47 points and the Nasdaq up 48.
Economists say January will probably be seen as the month in which the recession ended because of February's job gains.
The National Bureau of Economic Research, the traditionally recognized arbiter of when recessions begin and end in the United States, declared March as the starting date because employment peaked then, and has steadily dropped until now.
February's jobless rate dropped by 0.1 percentage point to 5.5 percent, the lowest level since October.
President Bush welcomed the decline, but said that Americans out of work or on the brink of being laid off still need help.
"I'm not going to let the numbers lull me to sleep," Bush said.
The new jobs report coincided with Senate passage of a recession relief package that would extend regular 26-week unemployment benefits by 13 weeks and allow additional extensions in states with high unemployment rates.
Companies are being cautious about hiring back workers and many businesses are still struggling. Kmart Corp. said yesterday that it is closing 284 stores across the country and eliminating 22,000 jobs.
"The unemployment situation won't truly improve until businesses increase hiring a lot more than they did in February," said Bill Cheney, chief economist with John Hancock Financial Services. "It takes roughly 150,000 new jobs per month just to keep the unemployment rate steady."
As it did during the last recession that ended in 1991, the nation's unemployment rate still could rise in coming months as businesses regain financial strength. Some economists think the rate will climb to more than 6 percent before a prolonged drop-off occurs.
"There are still very few new jobs and minimal wage gains," Cheney said. "It will be a few more months before things feel a whole lot better for all those people who lost their jobs over the past year, or who still fear losing them."
The drop in the unemployment rate occurred even as the work force grew. In February, 821,000 people returned to the job market after nearly 1 million gave up looking for jobs in January.
The largest increase occurred in retail, with 58,000 new jobs added, but analysts cautioned against too much optimism. Large seasonal layoffs always occur in retailing in January and February following the holiday-season buildup. But holiday hiring last year was well below normal, so there were fewer workers to lay off.
Job gains also occurred in health services, with 34,000 new jobs. And mild weather last month helped boost the number of jobs in construction by 25,000.
But manufacturing shed jobs for the 19th straight month, losing 50,000. Since the recession began, 88 percent of the job losses have been in manufacturing. February's loss was about half the average pace of the previous 12 months.
Employment in motor vehicle manufacturing jumped by 26,000 last month, fueled by the reopening of automobile plants that had shut down for inventory control in January.
Manufacturing's smaller decline last month "is another positive sign that a recovery is beginning to form in manufacturing, albeit more slowly than in the overall economy," said David Huether, chief economist with the National Association of Manufacturers.
