Payrolls grow by 262,000

Jeannine Aversa

Friday, March 4, 2005 | 9:23 a.m.

WASHINGTON -- America's employers added a sizable 262,000 jobs in February -- the most in four months. The new hiring, however, wasn't sufficiently brisk to accommodate a wave of job seekers, and the overall unemployment rate rose to 5.4 percent.

The latest snapshot of the country's employment climate, released by the Labor Department today, showed job gains across a range of industries -- from manufacturing and construction to retail and business services.

The report suggested that the labor market continues to be on the mend, but it still hasn't reached full health, analysts said.

"Indicators are showing some improvement in the labor market situation, but we are nowhere near where we need to be," said Ken Mayland, president of ClearView Economics.

The gain of 262,000 jobs in February was stronger than the increase of 225,000 positions that economists were forecasting before the release of the employment report. Payroll growth in February was up from January's sluggish gain of 132,000, which was less than the 146,000 increase initially reported.

The rise in the overall civilian unemployment rate to 5.4 percent in February was up from 5.2 percent in January. The increase last month came in part as more jobseekers streamed back into the market.

The unemployment rate is calculated from a separate statistical survey than the payroll figures. Thus, they can offer somewhat different pictures of what is happening in the labor market.

In other economic news, U.S. factories saw orders for goods rise by 0.2 percent in January, following a 0.5 percent rise in December. Gains in January reflected stronger demand for "nondurable" goods, such as food, leather products and chemicals.

Economists believe the economy in the January-to-March quarter is growing at a rate of around 4 percent, which would be a sufficient pace to spur solid job creation.

President Bush -- who was plagued with questions about the health of the job market throughout his first term in office -- wants to see the job market and the economy on a firmer footing. He especially needs that as he tries to sell the American public and Congress on his overhaul of Social Security and of the nation's tax code.

Wanting to keep the economy and inflation on an even keel, the Federal Reserve has boosted interest rates six times since June 2004. Another rate increase is expected on March 22.

For workers and jobseekers, it's still a somewhat difficult employment climate, analysts said.

Workers' average weekly earnings held steady in February at $535.83, unchanged from January's figure. There were 8 million people unemployed in February with the average duration of 19.1 weeks without work, down slightly from 19.3 weeks in January.

Meanwhile, the share of the working-age population working or actively seeking a job in February was 65.8 percent, unchanged from January when this figure sank to a nearly 17-year low.

In February, the nation's manufacturers added 20,000 positions. Employment growth in factories came after five previous months of job losses. Employment gains in the manufacturing of motor vehicles and parts accounted for about half of the gain, the government said.

The manufacturing sector was hardest hit by the 2001 recession and had struggled to get back to full throttle. While factory production has improved, the job situation has remained fairly weak.

The construction sector added 30,000 positions in February, after being flat in January as bad weather took its toll on employment.

Retailers also boosted payrolls by 30,000 last month, up from a gain of around 6,000 in the previous month. Professional and businesses services increased employment by 81,000 in February, up from an increase of 24,000 in January.