The U.S. economy added back the most jobs in four months in February, as easing COVID-19 case counts and a ramping vaccine rollout allowed distancing restrictions to begin to moderate. The unemployment rate also unexpectedly improved during the month.
The U.S. Labor Department released its February jobs report Friday morning at 8:30 a.m. ET. Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:
Non-farm payrolls: +379,000 vs. +200,000 expected and a revised +166,000 in January
Unemployment rate: 6.2% vs. 6.3% expected and 6.3% in January
Average hourly earnings, month-over-month: 0.2% vs. 0.2% expected and a revised 0.1% in January
Average hourly earnings, year-over-year: 5.3% vs. 5.3% expected and a revised 5.3% in January
The February jobs report also included a notable upward revision to payrolls gains in January, but a downward revision to losses in December. January's payroll gain was revised to 166,000, up from the tepid rise of 49,000 previously reported. However, December's payroll losses – the first since April — were revised to 306,000, from the drop of 227,000 reported earlier. Altogether, the U.S. economy remains about 9.5 million payrolls short of its pre-pandemic levels.
But last month, job growth accelerated as declining new COVID-19 cases and broadening vaccine-conferred immunity helped more businesses reopen with greater capacity. The unemployment rate unexpectedly improved to 6.2%, improving significantly from the pandemic-era high of 14.8%, but holding still well above the 50-year-low of 3.5% from February 2020. And the tick lower in the unemployment rate came even as the labor force participation rate held steady at 61.4%.
"Today’s employment report smashed expectations as 379K jobs returned to the economy during the month of February. This was a welcomed change of events for a suppressed labor market as we begin to turn the helm on a restrained economy and open back up," Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email Friday morning. "Looking ahead, it appears the ship is pointed in the right direction and the additional stimulus coming from Congress should be the wind in the sails to get the economy back on track."
Still, however, some economists warned against getting too excited about the recovery too quickly, given the ground the economy still needs to recuperate to return to pre-pandemic levels.
"Now in the second year of the pandemic, the labor market has 9.5 million fewer jobs than it did before the coronavirus arrived in the U.S. That gap rises to 11.5 million once you consider the jobs gains we would have seen absent the crisis," Nick Bunker, Indeed economic research director, wrote in an email. "At this pace, it will take about four and a half years to get back to where the labor market would have been without the pandemic. Millions of Americans out of work do not have that time."
The vast majority of industries registered net payroll gains in February, including some of the most badly beaten-down pockets of the service economy. Leisure and hospitality payrolls rose by 355,000 in February after declining by more than half a million between December and January, as a resurgence in new COVID-19 cases around the holidays led to renewed social distancing restrictions. Gains in this industry were followed by a wide margin by a rise in temporary help services positions, which rose by nearly 53,000 in February for a third straight monthly gain. Retail trade and education and health services payrolls also each rose by more than 40,000, respectively.
"The core story here is that the re-opening of services will be the dominant factor in the payroll numbers over the next few months," Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in an email Friday morning. "The monthly gains are likely to rise sharply unless a renewed surge in COVID cases, due to the B117 variant, forces states to delay their re-openings until vaccination finally squashes it."
The goods-producing sector, however, posted a back-to-back month of net payroll declines in February, with harsh winter weather weighing on many of these industries. Construction payrolls fell by 61,000 during the month, though manufacturing payrolls rose by 21,000 to more than reverse a drop in January. Consensus economists had been looking for manufacturing payrolls to rise by 15,000.
Other reports on the U.S. labor market have come in mixed recently. ADP reported Wednesday that private payrolls increased by just 117,000 in February, sharply missing estimates for a rise of 205,000 payrolls. But elsewhere, weekly jobless claims trended lower in February versus January, suggesting a moderation in the number of newly unemployed. Plus, the Conference Board's labor differential — measuring the percentage of those saying jobs are "plentiful" subtracted by those claiming jobs are "hard to get" — turned positive for the first time since November in February.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: