U.S. employers added 192,000 jobs last month, the government reported Friday — the biggest monthly jump since May and the latest sign that the nation’s employment picture is set to brighten this year.
The monthly payrolls gain was above market expectations for 185,000 jobs, with factories, professional and business services, education and health care among those expanding employment. As in previous months, the private sector accounted for all the job gains in February, with an addition of 222,000 positions, the most since April and up from 68,000 in January.
The Labor Department said the nation’s unemployment rate was 8.9 percent in February, down from 9 percent in January and sinking to a nearly two-year low.
“These numbers are very good — they’re an indication that we are close to off and running,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC Friday.
Friday’s employment report suggests that companies are feeling more confident in the economy and about their own financial prospects. And it strengthens hopes that businesses will shift into a more aggressive hiring mode and boost the economic recovery.
Economists had expected a strong jobs report for February, bolstered by news this week that fewer people sought unemployment benefits than in any week in nearly three years and an upbeat survey from the ADP payrolls firm. Other signs of a brightening economy have come in the form of strong corporate profits, a rise in consumer spending and an expanding service sector.
February’s report comes after January’s anemic figures, which showed just 36,000 jobs were added for the month, partly because of severe winter storms that kept businesses closed. Analysts said much of February’s job gain likely came from people returning to payrolls after the bad weather.
However, most Americans are likely to pay greater attention to the February employment rate, which ticked lower after falling from 9.8 percent in November to 9 percent in January, the quickest decline in more than half a century.
Zandi said he expects significant numbers of workers to enter the labor force in coming months, potentially pushing the unemployment rate higher. Unemployment rates often climb when the economy improves and people who haven’t been looking for jobs start hunting again. People who aren’t looking for jobs are not counted as unemployed.
“The unemployment rate is not going back to 10 percent — that’s unlikely; I see it going down slowly from here,” Zandi said. “What’s really encouraging in today’s jobs report is the manufacturing numbers. I think we will get a boatload of manufacturing jobs in the next six months, and they are good-paying jobs.”
Companies have dramatically slowed the pace of layoffs. That’s a major reason why economists are more optimistic that companies will hire more aggressively this year.
Still, it would take up to 300,000 new jobs a month on a consistent basis to reduce the unemployment rate significantly, economists say. Few analysts think monthly job gains in the 300,000-plus range could be repeated month after month.
The number of people filing for unemployment benefits sank last week to its lowest point in nearly three years, the Labor Department reported on Thursday. Companies, enjoying growing sales and profits, are relying less on layoffs to cut costs, analysts said.
Applications for unemployment benefits plummeted to 368,000 last week. It was the third decline in the past four weeks. Applications are now at their lowest level since May 2008. Unemployment benefit applications peaked during the recession at 651,000.
But there’s a big wild card for the economy — rising prices. Prices for food around the world are at their highest levels in 20 years, and gas prices have been rising for weeks, with the average for a gallon in the U.S. nearing $3.50.
For now, though, the economy is mostly flashing positive signs.
On Friday, the Commerce Department said businesses ordered more manufactured goods from U.S. factories in January, but excluding a big surge in demand for airplanes, the rise in demand was the smallest in three months.
Also, Americans appear more confident about spending money, which could convince businesses that the time is right to start hiring more workers. Stores representing shopping tastes across the income spectrum reported strong sales for February, including J.C. Penney, Macy's and Saks.
And the U.S. service sector, which employs about 90 percent of American workers in fields from health care to construction, is expanding at the fastest pace in more than five years, according to the Institute for Supply Management.
Productivity did rise in the final three months of last year. When workers are producing at a higher level, it makes it easier for businesses to hold off on hiring.