Friday, March 5, 2010

Nonfarm Payrolls Fall by 36,000; Jobless Rate Holds Steady

WASHINGTON—The U.S. economy shed fewer jobs than expected in February and the unemployment rate was steady at 9.7% despite stormy weather on the East Coast last month, which the government said may have temporarily hit payrolls and work hours.

The Labor Department, which carried out its surveys at the same time that the snowstorms battered the East Coast, said in a report Friday that nonfarm payrolls fell by 36,000 compared with a revised 26,000 drop in January.

Economists polled by Dow Jones Newswires were expecting payrolls to fall by 75,000 mainly because of the severe weather. The January figure was revised from an originally reported 20,000 decline.

The unemployment rate, which is calculated using a different household survey, remained at 9.7% last month. Economists had forecast the jobless rate would edge higher to 9.8%.

"Severe winter weather in parts of the country may have affected payroll employment and hours; however, it is not possible to quantify precisely the net impact of the winter storms on these measures," the Labor Department said.

Employment fell in construction and information, while temporary help services added jobs. The number of workers on government payroll fell by 18,000, while those on federal payroll were up 7,000.

An influx of Census workers helped add 15,000 temporary workers, but that was offset by a decline in postal service employment.

The storms of Feb. 4-7 and 9-11 likely prevented a significant number of Americans from being counted on payroll during the key period that includes the 12th, when the Bureau of Labor Statistics carries out the survey. The blizzards that hit the East Coast, a densely populated work area where transportation was badly disrupted by the snow, may also have caused a delay in new hiring.

Analysts expect the negative impact the weather had on the jobs market in February to be reversed by a positive impact on March employment growth.

History has shown that when a snowstorm happened early enough in the month to overlap with the survey week, there's nearly always been a deterioration in the jobs market for that month, followed by an improvement the following month.

"Overall, we do not believe that the underlying employment situation has changed; job losses continue to abate and the weather-related losses will be recovered in subsequent months", said analysts at Credit Agricole ahead of the release.

Since December 2007, the start of the worst U.S. recession in decades, payroll employment has fallen by 8.4 million.

The White House, which has job creation at the top of its agenda, warned Thursday that February's report could be adversely affected by the storms. Though likely to be temporary, the anticipated bad news comes as the White House continues to defend last year's economic stimulus and press lawmakers for new jobs-creating initiatives.

The grim jobs report should help reinforce the Federal Reserve's view that short-term interest rates must remain at a record low for several months at least. Fed Chairman Ben Bernake last week said bad weather was likely to have impacted the February jobs report, and warned against reading too much into it.

Fed officials have predicted the unemployment rate will remain above 9% in the fourth quarter of 2010 due to a slow recovery.

Friday's jobs report also showed that average hourly earnings rose to $18.93 in February from $18.90 the previous month. The average workweek fell by 0.2 hour to 33.1 hours, a sign of how the bad weather hit the labor market last month.

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