Economy Watch: Private Sector Hiring on All Cylinders
- Mar 12, 2012
The U.S. private sector carried the entire load of creating jobs in February, according to the Bureau of Labor Statistics on Friday, with private payroll employment increasing by a net of 233,000 positions. The total increase in jobs for the month was 227,000, meaning that employment shrinkage in the public sector dragged the total down, though not by a vast amount.
The improvement in hiring was broad-based. Professional and business services added 82,000 jobs in February, according to the BLS, while health care and related activities added 61,000, leisure and hospitality increased by 44,000, and manufacturing employment rose by 31,000. Workers were paid slightly more during February as well, with average hourly earnings for all employees up by 0.1 percent; over the past 12 months, average hourly earnings have increased by 1.9 percent.
Also, the employment picture for December and January, already known to be strong, turned out to be even stronger than previously estimated. The BLS revised the increases in payroll employment for December from 203,000 to 223,000, and January’s increases from 243,000 to a 284,000, the highest increase since an anomalous spike in May 2010, when the total was up 516,000. Even in healthier economic times (2004 to 2006, for example), increases of more than 250,000 during a month were the exception rather than the rule.
U.S. rail traffic mixed in February
In a lesser-known metric, but one still indicative of economic activity, the Association of American Railroads (AAR) reported late last week that U.S. rail carloads originated in February 2012 totaled about 1.41 million, down 27,555 carloads, or 1.9 percent, compared with February 2011. On the other hand, intermodal volume in February 2012 totaled about 1.122 million containers and trailers, up 26,284 units or 2.4 percent compared with February 2011.
Fourteen of the 20 commodity groups tracked by AAR showed gains in February 2012 compared with the same month last year, including motor vehicles and parts; petroleum and petroleum products; steel and other primary metal products; crushed stone, gravel and sand; and metallic ores. Commodities with carload declines in February were led by coal, down 10.6 percent from a year ago. Other commodities with declines included grain, farm products besides grain and nonmetallic minerals.
“If you exclude carloads of coal and grain, which are down for reasons that have little to do with the economy, rail traffic in February was encouraging,” AAR senior vice president John T. Gray noted in a press statement. “Intermodal traffic was up for the 27th straight month, while carloads of a wide range of commodities—lumber, chemicals, petroleum, paper, steel and more—saw increases in February. We’re hopeful it’s a sign of broad-based improvement in economic conditions.”
Fitch downgrades Greece to sort-of default
Most Greek bondholders are going along with the bond swap deal hammered out earlier this year, but that didn’t keep Fitch from downgrading Greece’s long-term debt on Friday from ‘C’ to ‘RD’—Restricted Default, that is. “The downgrade to ‘RD’ reflects Fitch’s previous commentary that the exchange would constitute a sovereign default event under the agency’s distressed debt exchange rating criteria, and follows the downgrade of Greece to ‘C’ from ‘CCC’ on 22 February,” the ratings agency said in a press statement.
Thus, technically, Greece can be said to be in default, though it isn’t the “hard default” that’s been the boogeyman of international finance for some time now, and which probably would have meant a sudden and panicky nonpayment of bondholders. Instead, under the terms of the bond swap, their estimated loss will be about 74 percent. Yet perhaps a quarter of a loaf is better than none, and no panic is certainly better for the rest of the world than a hard-default panic. The question now: Will the bondholders of the other queasy euro-zone economies get the same radical haircut treatment?
Wall Street seemed happy on Friday about the hiring numbers, but not too happy, since the Dow Jones Industrial Average gained only 14.08 points, or 0.11 percent. The S&P 500 was up 0.36 percent and the Nasdaq advanced 0.6 percent.