US firms boost workforce but jobless rate rises

Economy bouncing back after bad weatheras 175,000 gain employment in February

PUBLISHED : Saturday, 08 March, 2014, 1:40am
UPDATED : Saturday, 08 March, 2014, 1:40am

The United States Department of Labour said employers added more workers than projected last month, indicating the economy is starting to bounce back from a weather-induced setback.

The jobless rate unexpectedly climbed from a five-year low and the trade deficit was little changed.

The 175,000 gain in employment followed a revised 129,000 increase in January that was bigger than initially estimated, labour department figures showed. The median forecast of economists in a survey called for a 149,000 advance last month.

Unemployment rose to 6.7 per cent from 6.6 per cent as more people entered the labour force and could not find work.

Fundamentals are good. Faster job growth means … more spending

The report indicates employers remain positive about the economy's prospects after winter storms and freezing temperatures across the eastern US slowed consumer spending, housing and manufacturing. Lowe's is among those boosting headcount, setting the stage for further gains as consumers return to stores.

"The fundamentals are good," Joe LaVorgna, the chief US economist at Deutsche Bank Securities in New York, said before the report. "Faster job growth means faster income and more discretionary spending. Ultimately, with more business spending, not only will they hire more people, they'll hire more capital. Everything becomes self-reinforcing."

The figures showed hiring at professional and business services increased by the most in a year, while payrolls also rebounded in education and health services. Government agencies, factories and construction firms also increased headcounts last month. Revisions to prior reports added 25,000 jobs to overall payrolls in the previous two months.

A survey of 92 economists estimated that last month's payrolls ranged from gains of 100,000 to 220,000. Last year, the US added 194,000 jobs each month, on average.

The unemployment rate was forecast to hold at 6.6 per cent last month. The labourd department's survey of households showed an increase in people entering the workforce. The so-called participation rate held at 63 per cent. The figures showed 601,000 Americans were not at work because of bad weather during the survey week, the most since 2010, the agency said.

Bad weather can affect the payroll count if employees did not receive compensation for the entire pay period that included the 12th month.

Hours worked declined as well because of the inclement conditions. The average workweek for all employees dropped to 34.2 hours from 34.3. For production and non-supervisory employees, hours worked fell to 33.3 from 33.5. Almost 6.9 million people worked less than a full week, the most since record-keeping began in 1978, the agency said.

The week to February 15 was the coldest second week of February since 2011, according to weather-data provider Planalytics. The South Atlantic region of the US experienced the most snowfall since 1983 and New England registered the most in 20 years during the period.