U.S. jobs jump masks big challenges

The number of long-term unemployed was little changed from the previous month, at around 4.1mln

  
A "Now Hiring" sign advertising jobs at a hand car wash is seen along a street, as the spread of the coronavirus disease (COVID-19) continues, in Miami, Florida, U.S. May 8, 2020.

A "Now Hiring" sign advertising jobs at a hand car wash is seen along a street, as the spread of the coronavirus disease (COVID-19) continues, in Miami, Florida, U.S. May 8, 2020.

REUTERS/Marco Bello

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

WASHINGTON  - The U.S. labor market recovery is less robust than it appears. The economy added 379,000 positions last month, mainly because temporarily laid-off workers were rehired as Covid-19 restrictions on activity were eased. But a plethora of evidence suggests that Federal Reserve Chair Jerome Powell’s wait for full employment will be a long one.

The headline number in Friday’s jobs report was double what economists polled by Reuters had expected and the unemployment rate fell slightly from January to 6.2%. Sectors hit by renewed lockdowns in the winter saw the most gains, with leisure and hospitality adding 355,000 jobs while retail gained 41,000 positions. And the labor force participation rate remained unchanged at 61.4%. So far so good. But other figures told a different story.

The number of long-term unemployed was little changed from the previous month, at around 4.1 million. And the employment to working-age population ratio has fallen to 57.6% from 61.1% a year earlier. What’s more, after adding in the underemployed, the jobless rate was actually 11.1%.

There are also some marked divides. The Black jobless rate rose to 9.9%, fully reversing the decline seen in January. That for other groups fell: to 5.6% for whites and 8.5% for Hispanics. The unemployment rate for those who don’t have a high school diploma came in at 10.1%, compared with 3.8% for holders of bachelor's degrees or higher.

Unlike his predecessor, President Joe Biden didn’t take a victory lap over the headline number. Instead, the Council of Economic Advisers posted a sober assessment in a blog post, noting there were still 9.5 million fewer jobs than in February 2020 and that it would take more than two years of job growth at last month’s pace to return to pre-pandemic levels.

Powell has emphasized inclusive growth in his push for full employment. On Thursday, he reiterated that the economy was still a long way from that goal and the central bank was in no hurry to raise interest rates. That latest labor data bolsters his case.

CONTEXT NEWS

- The U.S. economy added 379,000 jobs in February, the Labor Department reported on March 5. Economists surveyed by Reuters had expected an addition of 182,000 positions. The labor force participation rate was unchanged from January, at 61.4%.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Swaha Pattanaik and Amanda Gomez) ((gina.chon@thomsonreuters.com; Reuters Messaging: gina.chon.thomsonreuters.com@reuters.net))

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