Job hunters enjoyed a successful February, cutting the nation’s unemployment rate to its lowest level in four years and boosting confidence in the economic recovery.
Unemployment fell to 7.7 percent last month, from 7.9 percent in January, the U.S. Department of Labor said Friday.
That is the lowest that joblessness has been since December 2008, when the rate first topped 7 percent amid the Great Recession.
Much of the credit goes to a long-awaited rebound in housing activity that boosted construction hiring to its highest level in six years.
“The housing market will again drive the economy and we are seeing that,” said Sophia Koropeckyj, managing director of Moody’s Analytics. “And that’s likely to be sustained.”
Hiring in all areas produced 236,000 more new jobs than were lost during February, the report said. The growth was stronger than most forecasts from economists.
Employers notably boosted payrolls in health care, retail, and professional and business services, which showed that the gains in the job markets were widely based. The average reported work week grew longer in February and average wages rose, too.
The surprisingly strong jobs report sparked renewed faith in the economic recovery in the face of looming federal spending cuts — called sequestration — and an increase in payroll taxes and gasoline prices this year.
“Any way you slice it, it was a solid report on the improving health of the labor market at a time when concerns have increased regarding sequestration’s impact on jobs,” said economist Scott Anderson with Bank of the West.
Stock prices climbed higher on the news. The Dow Jones industrial average, which topped its pre-recession high mark earlier in the week, gained 67.58 points, closing at a record 14,397.07.
But future jobs reports may not live up to February’s standards as federal spending cuts catch up to the job market. And 12 million Americans still have found no job despite looking for work.Building payrolls
Experts took note of the nation’s 48,000 additional construction jobs last month. A lot of that came from building houses, apartments and student housing in a sign of economic confidence.
Kansas City-based JE Dunn Construction Co. said it may add a couple of hundred jobs this year to the 2,500 working at its 20 offices and its job sites nationally.
“Most of the increase in construction is coming from around the country — not necessarily Kansas City — and it’s more focused for the moment in residential construction,” said Terry Dunn, president and chief executive of the company.
Dunn Construction doesn’t build individual houses, but homebuilders have been busy in the Kansas City area. Housing starts in January were their strongest in five years, according to the Home Builders Association of Greater Kansas City. The 273 single-family permits issued that month was a 45 percent increase from the same month a year ago.
Dunn said historically low interest rates and a pent-up demand for housing are driving the resurgence in construction and hiring.
Bloomberg News reported Friday that one harbinger of mortgage rates, namely the interest rates on bonds issued by mortgage guarantors Fannie Mae and Freddie Mac, increased to their highest levels in nine months following the February jobs report.
The Federal Reserve has engineered those historically low interest rates, and many expect the Fed to keep its foot firmly planted atop financing costs.
Dunn said he also is seeing a construction boost from health care as hospitals have been adding to their outpatient facilities in anticipation of services needed under the Affordable Care Act.
Other companies have added to payrolls without hiring. Ash Grove Cement Co. in Overland Park, for example, waded through the recession with unpaid work furloughs rather than layoffs. There are no new jobs but the furloughs are a thing of the past, chief executive Charlie Sunderland said.Expansion plans
Hiring in professional and business services led February’s job growth, providing 73,000 net new jobs or 30 percent of the increase for the month.
Job placements have improved over the last year at Rockhurst University both for graduates and alumni, said Mike Theobald, director of career services. He’s seeing job opportunities in areas such as accounting and business, particularly in sales.
Some of the hiring is coming from Northwestern Mutual Life Insurance Co., which plans to add 5,500 financial advisers nationwide this year.
R. Philip Sarnecki, a managing partner in its Leawood office, said he already has filled some of the 54 adviser positions to be added among five regional offices. Moreover, the six locations are looking to fill 100 internships.
The February job gains also reflect increased spending by consumers, who have shrugged off higher gas prices and the loss of some take-home pay when the temporary drop in the payroll tax ended Jan. 1.
Shoppers are helping Plastic Packaging Technologies LLC expand and hire, said Bob Perkins, director of human resources for the Kansas City, Kan.-based company. Its 180 employees make food packaging.
“I’m not sure of the number we’ll be adding, but the company continues to make investments in new equipment and with that typically comes more jobs,” Perkins said.Headwinds remain
Not all the jobs news Friday was good.
Google Inc. announced a second round of layoffs at its Motorola division, which came from its purchase last year of Motorola Mobility. The 1,200 planned layoffs are in addition to 4,000 last summer.
Struggling retailer J.C. Penney Co. said it would eliminate 2,000 jobs.
And some area employers are cutting back as well. The Lake City Army Ammunition Plant in Independence has offered hourly workers among its 2,600 employees a “voluntary layoff” and expects involuntary job cuts to follow.
Some economists also caution that the job market still has a long way to go.
Official unemployment totals fell partly because 130,000 more American’s dropped out of the labor pool in February. And the long-term unemployed, who haven’t worked in more than six months, did not gain ground in last month.
“This is about half the rate (of jobs growth) we would require to absorb those unemployed in the Great Recession by the end of the decade,” said economist Michael Hicks of Ball State University in Muncie, Ind.