In Surprise, Unemployment Falls to
5.5% as Companies Add Jobs
By SHERRI DAY
In the latest sign that the
American economy is
recovering from the recession, the
nation's unemployment rate
unexpectedly fell for the second
consecutive month to its lowest
level since October as employers
added jobs, the government said
today.
The unemployment rate slipped to
5.5 percent in February from 5.6
percent in January, the Labor
Department reported. Wall Street
economists had predicted that the
unemployment rate would rise to
5.8 percent.
The economy stopped shedding
jobs in February, as payrolls rose
by 66,000 outside of the farming
sector. That represented the first
increase in nonfarm payrolls
since July 2001, the government
said. Despite a decrease in the
unemployment rate in January, the
economy still shed a revised
126,000 jobs during the month.
Job losses have averaged
146,000 a month since the recession started a year ago.
While economists said the unemployment rate is generally
a coincident or lagging indicator, today's report adds
credence to the belief that a recovery is under way.
"This along with a whole string of other information that
has come out over the past few weeks suggests that the
recession is over, and we are starting a new expansion,"
said Richard D. Rippe, chief economist at Prudential
Securities. "We've stopped losing jobs, and that is a
significant change from what we had seen before."
The encouraging unemployment report came as the Senate
overwhelmingly passed an economic stimulus package
and sent it to President Bush, who has said he is eager to
sign it even though it does not include as many tax breaks
as he wanted. The 85-to-9 Senate vote came a day after
the House passed the measure by 417 to 3.
Led by technology issues, stocks moved higher in reaction
to the February employment report. The Nasdaq
composite index jumped 48.04 points, or 2.55 percent, to
close at 1,929.67. The Dow Jones industrial average rose
47.12 points, or 0.45 percent, to 10,572.49. The broader
Standard & Poor's 500-stock index gained 6.77 points, or
0.58 percent, to 1,164.31.
Among the businesses surveyed by the government, the
retail sector was responsible for most of the increase in
employment. Retailers added 58,000 jobs in February,
accounting for seasonal adjustments. This followed a rise
of 41,000 in January. But economists said those numbers
could be deceiving. Because retailers hired fewer
workers during the holiday season, they had fewer layoffs
in January and February, the government said. Since July,
the employment in retail trade is down by a seasonally
adjusted 142,000.
Other sectors that grew in February included construction
employment, which bolstered by warm and dry weather
conditions, increased by 25,000 jobs. Motor vehicle
employment also rose by 26,000 jobs, as many factories
that had been closed in January to reduce inventory
reopened in February.
Still, the overall manufacturing sector continued to be a
laggard, although job losses in the area appear to have
slowed. The sector shed some 50,000 jobs in February,
compared with average losses of about 111,000 a month
over the last year, the government said.
Meanwhile, the services industry continued its third
consecutive month of growth, adding 34,000 jobs in health
services employment, with much of the gains taking place
in clinics and doctors' offices. Employment in help-supply
services and engineering and management services also
increased.
But employment in the insurance, financial services and
transportation sectors also continued to fall in February.
The overall weekly earnings of American workers rose
0.1 percent, to $498.88. For the year, average hourly
earnings rose 3.7 percent and average weekly earnings
grew 3.1 percent, the government said. The average work
week for employees was nearly unchanged in February at
34.1, disappointing economists who believed that based
on other positive economic news that figure would be
higher.
"That's well below the fourth-quarter average, which is a
surprise to me," said Lou Crandall, chief economist at
Wrightson Associates.
The February unemployment report follows other
economic statistics that provided evidence of a
strengthening economy. Last week, the government
reported that the nation's gross domestic product grew 1.4
percent in the fourth quarter of 2001. Manufacturing
activity also indicated expansion for the first time in 18
months, the Institute for Supply Management said. And
orders for durable goods and consumer spending both rose
in January.
On Thursday, Alan Greenspan, the Federal Reserve's
chairman, amended his semi-annual report before the
Senate Banking Committee to state that a recovery was
"already well under way."
But despite the growing psychological momentum toward
recovery, economists warned that the unemployment rate
could still inch higher in the coming months.
"There are still very few new jobs and minimal wage
gains," said Bill Cheney, chief economist at John Hancock
Financial Services (news/quote). "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."
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