Despite the fact that 175000 new jobs were created last month, the percentage of the workforce idle and actively seeking work in the USA edged up from 6.6 to 6.7% figures from the US Department of Labour show for February. The American population is continuing to grow and this means that for unemployment to stand still, some 80000 new jobs are needed, according to The Wall Street Journal.
Analysts had anticipated that the economy would put on 150000 new jobs, so the performance was better than expected. In December and January, the new jobs created totals came in at 84000 and 129000 (revised upwards from 75000 and 113000) respectively.
Despite the recent improvement, job creation in the year to the end of November was running at an average of 205000 and it was against this backdrop that the Federal Reserve decided to begin the “Taper”, cutting the asset purchase programme by $10 billion per month in December and January. The Fed is likely to prune a further $10 billion from the programme this month, taking the asset purchase programme down to $55 billion per month. The programme is designed to keep long term borrowing costs (and mortgage costs) low whilst injecting liquidity into the economy, such that banks have funds to lend to businesses.
February’s data is good when it is recalled that the USA has suffered its worst winter for about 30 years. Despite this, the construction industry created 15000 jobs in February. Roughly 10.5 million Americans are currently unemployed. The patchy nature of the recovery is reflected in the fact that certain sectors are still seeing significant job losses: the electronics and appliance sector saw 12000 jobs lost and 4100 jobs went in the retail sector.