Economy and jobs
Blast of winter weather can’t faze employers
Published: Wednesday, March 12, 2014 at 3:54 p.m.
Last Modified: Wednesday, March 12, 2014 at 3:54 p.m.
Brutal winter weather snarled traffic, canceled flights and cut power to homes and factories in February. Yet, it didn't faze U.S. employers, who added 175,000 jobs, far more than the two previous months.
Modest but steady job growth has become a hallmark of a nearly 5-year-old economic rebound that remains sluggish yet strikingly resilient. The economy has been slowed by political gridlock, harsh weather and global crises. But those disruptions have not derailed growth.
Though the unemployment rate rose to 6.7 percent from a five-year low of 6.6 percent, it did so for an encouraging reason: More people began seeking work. The unemployment rate ticked up because most did not immediately find jobs.
Friday's report from the Labor Department suggested that a long-hoped-for acceleration in growth and hiring still has not occurred. But that might not be all bad: Households have pared debt and avoided the excessive spending and borrowing that have undercut explosive economies in the past.
Total U.S. credit card debt is still 14 percent lower than before the Great Recession began in December 2007, according to the Federal Reserve.
And moderate but consistent hiring still means more people have money to spend.
"A modest expansion may very well last longer than one that bursts out with big increases in spending and debt," said David Berson, an economist at Nationwide Financial.
Some economists also suggested that having endured a harsh weather, the economy may be poised to pick up soon.
"If not for poor weather conditions, job growth would have been stronger," said Michelle Meyer, an economist at Bank of America Merrill Lynch. "This suggests we should see solid gains ... in coming months."
The figures were a welcome surprise after recent economic data showed that severe weather had closed factories, lowered auto sales and slowed home purchases. Along with a sharp increase in wages last month, the jobs report indicated confidence among some employers that consumer spending will increase in the near future.
The severe winter appeared to have less effect on hiring than most economists had feared. Construction companies, which usually stop work in bad weather, added 15,000 jobs. Manufacturing gained 6,000 for a second straight month. Government added 13,000 jobs, the most in six months.
Daniel Alpert, managing partner at Westwood Capital, noted that roughly two-thirds of the job growth in January and February was in higher-paying industries. That's a reversal from all of last year, when about two-thirds of job growth was in lower-paying fields.
A category called professional and business services, which includes better-paying jobs such as engineers, accountants and architects, along with some lower-paying jobs such as temporary workers, added 79,000 jobs in February. That was the most in a year.
Retailers, though, lost 4,100 jobs, transportation and warehousing firms 3,600.
Despite February's solid overall gain, the monthly average of 129,000 jobs that employers have added from December through February marks the weakest three-month stretch since mid-2012. It's down from a 225,000 average for the previous three months.
The government revised up its estimate of job gains for December and January by a combined 25,000.
Friday's report makes it likely that the Federal Reserve will continue reducing its monthly bond purchases at its next meeting March 18-19. The Fed is buying Treasury and mortgage bonds to try to keep long-term loan rates low to spur growth. Fed policymakers have reduced their monthly bond purchases by $10 billion at each of their past two meetings to $65 billion.
Consumers increased their borrowing in January on autos and student loans but cut back on their credit card use.
Consumer borrowing rose $13.7 billion in January following an even larger $15.9 billion rise in December, the Federal Reserve reported Friday.
The category that includes auto and student loans increased $13.9 billion while the category that covers credit cards fell $226 million, marking the third time in the past five months that credit card loans have declined.
The big overall increase pushed total borrowing to a record $3.11 trillion. Gains in borrowing are seen as an encouraging sign that people are more confident and willing to take on debt to finance consumer spending, which accounts for 70 percent of economic activity.
That has been the trend over the past year. Most of the gains have come in the category that covers auto and student loans. Credit card borrowing has been rising more slowly.
Borrowing on credit cards plunged after the Great Recession as financial institutions tightened lending standards and households became more cautious about taking on high-interest debt at a time when millions of people were losing their jobs.
Even with recent gains, credit card debt in January was still 16.2 percent below its peak above $1 trillion reached in July 2008. Credit card debt stood at $856.2 billion in January, up just 0.9 percent from a year ago.
The measure of auto loans and student loans in January stood at $2.26 trillion, up 7.8 percent from a year ago. It has been up every month but one since May 2010.
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