March 4, 2005 -- More than a quarter-million jobs were created last month, confirming that the economy is growing at a robust pace.
The Labor Department reported Friday that 262,000 jobs were created in February, the largest increase since October and nearly an 80% jump from January. But it wasn't all good news. In the same report, the Labor Department also announced a rise in the unemployment rate, from 5.2% in January to 5.4% in February.
The discrepancy between an increase in jobs and a rising unemployment rate arises because the data is taken from two separate surveys -- the payroll survey and household survey. According to Daiwa Securities economist Michael Moran, the payroll survey, which gauges the number of jobs created, is a better indicator of the overall labor market because it is less volatile.
According to payroll processor SurePayroll's Small Business Scorecard, small businesses didn't contribute to February's job surge. Since the beginning of the year, small businesses have experienced a zero national hiring rate, according to SurePayroll's survey of 15,000 small firms.
However, William Dunkelberg, the chief economist at the National Federation of Independent Business (NFIB), said small businesses added .15 workers in February.
If the average small business has seven employees, which is what John Morphy, the CFO of payroll processor Paychex, estimates, then based on the NFIB results, small business are adding employees at an annual rate of 25%.