Economy Adds 227,000 Jobs

The government uses a survey of payrolls to determine how many jobs were added or lost each month. That is the survey that produced the 277,000 number. But the payroll survey tends to undercount small businesses and does not count the self-employed.

It uses a separate survey of American households to calculate the unemployment rate. That survey picks up hiring by companies of all sizes, including small businesses, companies just getting off the ground, farm workers and the self-employed.

The household survey found that 428,000 more Americans reported having jobs in February. When the economy is improving, many economists say, the household survey does the better job of picking up the shift because it detects small business hiring.

In the household survey, only people who are out of work and actively looking for a job are counted as unemployed. And one reason why the unemployment rate had fallen steadily over the previous five months, from 9.1 percent last August to 8.3 percent in January, was that so many people who were out of work gave up looking for a job.

But over the past two months, that trend appears to have reversed. In February, 476,000 people re-entered the labor force. Since the start of the year, that figure is almost 1 million — the strongest two months since January and February 2003.

A catchall measure of the unemployed and the so-called underemployed — people who are working part-time but would rather by working full-time — fell to 14.9 percent, the lowest the three years.

That figure includes three groups: the part-time workers who want full-time work, people who are unemployed and looking for work, and people who are unemployed and have stopped looking.

Other economic indicators have improved markedly in recent weeks. Consumer confidence in February was the highest in a year, and unemployment claims, the best measure of the pace of layoffs, have averaged 355,000 a week, near a four-year low.

Service companies, which employ most Americans, are expanding faster, according to a private survey this week. The industries of mining, educational services, transportation and warehousing are particularly strong.

Some companies have to hire because they can’t squeeze any more work from their employees. Worker productivity rose last year at its slowest pace in a generation, suggesting companies will have to hire to meet growing demand.

Wages are still rising only modestly. Average hourly pay increased by 3 cents in February to $23.31. In the past year, it has gone up only 1.9 percent, trailing the rate of inflation.

The factors restraining the U.S. economy seem to be easing, or at least less damaging than they used to be. Greece has struck a deal to get an international bailout and avoid a default later this month that could have rattled the world financial system.

And while the price of gas has crept up almost every day for a month, and is the highest on record for this time of year, that has less of a bite when the economy is growing and people feel more confident.