Employment Shows Substantial Decline In February

Employment unexpectedly fell for the second consecutive month in February, according to a report released by the Labor Department on Friday, although the report also showed a modest decrease in the unemployment rate.
The report showed that non-farm payroll employment fell by 63,000 jobs in February following a revised decrease of 22,000 jobs in January. The drop in employment marked the biggest decrease in jobs since March of 2003.
On average, economists had been expecting employment to increase by about 25,000 jobs, although there had been a wide range of estimates. The unexpected drop in employment reflected weakness in the goods-producing sector, which came amid notable decreases in both construction and manufacturing jobs.
The goods-producing sector lost a total of 89,000 jobs. Employment in the service sector increased by a modest 26,000 jobs, as decreases in retail and business services jobs partly offset increases in education and health services, leisure and hospitality and government jobs.
At the same time, the report showed that the unemployment rate edged down to 4.8 percent in February from 4.9 percent in January.
The decrease came as a surprise to economists, who had expected the unemployment to increase to 5.0 percent. However, the drop in the unemployment rate came as hundreds of thousands of people left the civilian labor force.
The report also showed that average hourly earnings increased by $0.05 or 0.3 percent to $17.80 following an increase of $0.05 in January. On a year-over-year basis, average hourly earnings were up 3.7 percent.
The disappointing employment data is likely to add to recent concerns about the possibility that the U.S. is already experiencing a recession. On the other hand, the data is likely to add to expectations that the Federal Reserve will continue to cut interest rates.