Businessweek

-Barclays Doesn't Expect Feb Jobs Report To Alter Fed Policy -Wells Fargo, TD See Evidence of Continued Structural Challenges By Brai Odion-Esene WASHINGTON (MNI) - There is one word that can be used to sum up the view of analysts and economists regarding the U.S. February employment report: "Solid," painting the picture of a sound economy and continued momentum in job creation that might be able to withstand the negative drag from the budget sequester. The Bureau of Labor Statistics Friday reported that the U.S. economy added 236,000 jobs in February, far above the 160,000 expected in an MNI survey of economists, while the unemployment rate fell to 7.7% - the lowest since December 2008. "Overall, we interpret the February establishment survey as suggesting that labor markets have maintained their momentum heading into 2013, despite the downside risks posed by the package of policies to avoid the fiscal cliff, which should dampen consumption growth in the first half of this year, and the sequester budget cuts that went into effect beginning March 1," wrote Barclay's Michael Gapen. Going forward, "We look for the remaining discrepancies between trends in household and establishment employment data to be further reduced in the coming months," he added. Sarah Franks, analyst with Absolute Strategy Research Services, told MNI that the February jobs data "is exactly what we need - the housing market has provided the air cover but the rest of the economy needs to get on stable footing - and this needs to happen sooner rather than later." She said U.S. consumers continue to be concerned about their debt burden - with debt to income levels remaining an issue - "but our hunch is that this is a problem in the denominator not the numerator - if these good job numbers continue, income growth should follow, the recovery broadens, and debt concerns recede." The good jobs numbers, Franks added, will play an important role in shifting what is currently a bleak economic narrative. Fannie Mae Chief Economist Doug Duncan in a statement said the jobs data showed that businesses "shrugged off" the considerable uncertainty stemming from the fiscal front. "The strengthening trend in hiring over the past six months provides some comfort that the economy will be resilient enough to withstand additional headwinds that may lie ahead," he said. As for what this means for a housing market recovery that continues to gather pace, Duncan said the robust increase in construction employment of 48,000, coming on the heels of decent gains over the past several months, "confirms our view that, despite overall seesaw economic growth, the housing recovery will continue to gather strength this year." Jay Feldman, director of U.S. Economics Research at Credit Suisse, called the employment report strong on balance. "The labor market has solid cyclical momentum heading into the sequester," he said, with "the only material negatives amid a slew of positives" being the small downward revisions to headcount and the dip in labor force participation rate - to 63.5% from 63.6%. However, there lies evidence within all this good news that structural challenges remain in the labor market, according to Wells Fargo Chief Economist John Silva. "Even as the headline unemployment rate has improved in the typical, albeit slow, cyclical fashion, other indicators on the labor market continue to suggest that today's environment has changed from the past," he wrote. Silvia noted that job vacancies have become more plentiful as the economy has recovered, yet the unemployment rate remains high relative to the rate of job openings in the previous cycle. This, he said, "suggests more friction in matching the unemployed with available jobs." He added that the share of unemployed workers out of a job for more than 27 weeks remains historically high, and warned that the longer these workers are out of a job, "the higher the risk that the slow cyclical recovery results in a longer-lasting structural mismatch as