US Unemployment rate stable at 9.7%

The unemployment rate in the United States held steady last month as employers cut fewer jobs than expected, according to official data today that bolstered hopes that the worst of the downturn in the world’s largest economy is over.

Data from the US labour department showed that 36,000 jobs were cut in February and that the jobless rate held at 9.7%. That was a stronger result for the US labour market than economists had been expecting. The consensus forecast was for the closely watched non-farm payrolls report to show a loss of 50,000 jobs in February and for the jobless rate to edge up to 9.8%, according to a Reuters poll.

Some forecasters had warned that the report could be even worse, given the harsh weather last month. But the labour department said the effect of the winter storms was not clear.

While the payroll numbers are often subject to large revisions and big swings from month to month, economists said the February report was broadly encouraging. Rob Carnell at ING Financial Markets said: “Overall, this was a positive set of labour market data, and aside from the fact that the headline numbers are heavily distorted, they should provide some comfort about the US economic recovery.

“Minus 36,000 for the headline non-farm payrolls number suggests that had it not been for the snow, we may have seen a positive payrolls release. It was in any case much better than the consensus expectation, he said. “Indeed, a positive payrolls figure is exactly what we should now look for in March, when the snow has gone, and the snow effect reverses.”

An unemployment rate close to 10% will remain a headache for Barack Obama’s administration. The White House conceded the jobless rate was still “unacceptably high” but said the weather had disrupted the latest labour market report.

The White House senior economic adviser Christina Romer said in a statement: “Although the labour market remains severely distressed, today’s report on the employment situation is consistent with the pattern of stabilisation and gradual labour market healing we have been seeing in recent months.”

But she added a note of caution about the recovery: “Although the overall trajectory of the economy has improved dramatically over the past year and appears to be continuing to improve, there will surely continue to be bumps in the road ahead.”

There were further factors in the data that buoyed market sentiment about economic recovery. The payroll numbers for December were revised upwards to show employers cutting 109,000 jobs rather than the 150,000 first reported. At the same time, January’s figure was revised down slightly to 26,000 job cuts from a previous 20,000.

The dollar strengthened against other major currencies, including the pound, following the data and US stock markets rallied when they opened an hour later.

Stock markets elsewhere were also boosted by the stronger than expected report and the FTSE 100 extended gains to be more than 1% higher on the day in the wake of the data.

The less gloomy picture of the US jobs market echoed comments earlier in the day from a leading recruitment company. The UK-listed Michael Page said 2009 had been the most challenging year in its 33-year history but that in general, market conditions had stabilised and that it was now hiring again in a number of regions.



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