New figures show job market slowly healing
By Jeannine Aversa and Christopher S. Rugaber
WASHINGTON — At last, the unemployment crisis seems to be easing. That's the good news.
The bad news? Job creation remains scant because companies still lack enough confidence in the economy to ramp up hiring.
The U.S. jobless rate held steady at 9.7 percent in February. And employers cut 36,000 jobs — fewer than predicted. Those figures signaled that the job market is slowly healing.
Some economists said the jobless rate may have peaked and predicted the employment report for March will kick off a string of monthly job gains.
"We're on the cusp of some job growth, finally, finally," said Stuart Hoffman, chief economist at PNC Financial Services Group.
The Labor Department report issued yesterday cheered Wall Street, too. The Dow Jones surged 122 points, or about 1.2 percent.
But there's a long way to go. The recession eliminated about 8.4 million jobs. The slow recovery means hiring is expected to remain feeble for the rest of the year — at most a net gain averaging about 100,000 a month.
To put that in perspective, about 125,000 new jobs are needed each month just to keep up with population growth and prevent the unemployment rate from rising.
To reduce the jobless rate significantly, employers would need to create 200,000 to 300,000 jobs a month. But most of them are waiting to see stronger sales, more spending by consumers and businesses, and a more vigorous global rebound to stimulate demand for U.S. goods and services.
Some encouraging signs that consumers are more willing to spend emerged in reports earlier this week. Shoppers hit the malls and spent more freely in February. And activity in both the manufacturing and services industries of the economy is growing.
Federal Reserve Chairman Ben Bernanke and most economists are forecasting only a modest rebound. That's why economists say it could take at least four years to restore the 8.4 million jobs wiped out by the worst recession since the 1930s. It could take even longer for the jobless rate to drop back down to a normal 5.5 percent to 6 percent.
Most economists had expected the unemployment rate to rise to 9.8 percent in February. In October, the rate hit 10.1 percent, a 26-year high. Some experts now think that might have marked the peak. Others note that if people who stopped looking for work resume their job searches, the rate could tick up.
In February, 1.2 million people abandoned their job searches — 473,000 more than in February a year ago. All told, nearly 14.9 million Americans are now unemployed — nearly twice as many as when the recession began in December 2007.
Economists and investors were relieved that the job losses turned out to be just 36,000. That was larger than January's revised loss of 26,000 jobs, but it marked a huge improvement from last February, when employers slashed 726,000 jobs.