By Eric Morath and Hannah Lang 

Hiring accelerated in February as restaurants and other hospitality businesses reopened and coronavirus cases eased, setting up the U.S. economy for broader growth this spring.

U.S. employers added 379,000 jobs in February -- the largest monthly increase since October -- and January gains were revised higher to 166,000 jobs, the Labor Department said Friday. The hiring thaw comes after job growth froze earlier in the winter.

The unemployment rate, determined by a separate survey, ticked down to 6.2% last month. The rate is well down from a 14.8% peak in April 2020, but remains above pre-pandemic levels, when unemployment was near 50-year lows. Overall, the U.S. has 9.5 million fewer jobs that a year earlier, just before the coronavirus pandemic took hold in much of the country.

In February, most of the job gains occurred in the leisure and hospitality sector, which includes restaurants, adding 355,000 jobs. There were smaller gains in temporary help services, manufacturing and healthcare.

The gains reflect reduced business restrictions, more people receiving vaccines, a lower level of Covid-19 infections and a recent round of government aid to households and businesses, which boosted consumer spending early this year.

"Some consumers are dipping their toes back in," said Nela Richardson, a Ph.D. economist at human-resources software firm Automatic Data Processing Inc. In addition to restaurants, there were job gains at hotels, stores and personal services, such as salons. "They're maybe not willing to fly off on an airplane, but appear more willing to dine in at a neighborhood restaurant."

Dr. Richardson said she expects hiring to accelerate further in the coming months, to more than a half-million jobs a month. "We'll see a burst in hiring before things start to taper off again," she said.

The opening of service-sector jobs is aiding the employment prospects of some workers disproportionately affected during the pandemic. The unemployment rate for women, who are more likely to hold jobs at stores and restaurants, fell to 6.1% in February. Their rate is now below that of 6.3% for men.

The unemployment rate also declined for Latino and Asian workers. However, the rate increased for Black workers to 9.9%.

"Hispanic and Asian workers, who saw large job losses last spring, are increasingly being hired as service businesses start to reopen," said Daniel Zhao, senior economist at job rating site Glassdoor. "The elevated Black unemployment rate is a concern for the overall economy. Historically we know Black workers tend to be the first fired and last hired."

It took nearly a decade into the last economic recovery, which began in 2009, for Black workers to see the unemployment rate gap with white workers start to narrow.

Despite last month's gains, the leisure and hospitality sector has 3.5 million fewer jobs than a year earlier, the Labor Department said, showing the recovery is far from complete. The Congressional Budget Office projects it will take until 2024 to fully recoup jobs lost during the pandemic.

Friday's report showed job losses at all levels of government, though the Labor Department noted disrupted school calendars have changed usual hiring patterns. Employment in construction fell by 61,000 in February. Severe winter weather may have held down employment in the sector, the department said.

Doctor and dentist offices and other non-hospital healthcare providers added 36,000 jobs last month. The sector has mostly recovered the more than 1 million jobs lost last spring, when nonessential health services were ordered to close. Employment at pharmacies and other personal-care stores, where many people are getting vaccinated, is recovering at a faster pace than overall retail.

Friday's report adds to signs that the labor market and overall economy have improved in recent weeks.

Worker claims for unemployment benefits -- a proxy for layoffs -- fell in the latter half of February to their lowest level in nearly three months, though they remain above the pre-pandemic peak. Following back-to-back months of contraction, U.S. workers reported for more shifts in February, said Ultimate Kronos Group, a workplace software firm. And internet job boards showed openings early this year returned to pre-pandemic levels, indicating building demand for labor.

"We're desperately trying to hire because I don't see it slowing down," said Bobbi Westerby, chief executive at Environmental Consulting & Technology Inc. The Gainesville, Fla., firm, which works on renewable energy and other projects, paused hiring last spring due to the uncertainty the pandemic caused. It also lost staff to retirements and employees stepping away to care for children, Ms. Westerby said.

But the firm's revenue held up better than she initially expected. By July of last year it needed to start hiring. The 215-person firm has 10 more employees than before the pandemic and 13 open positions it hopes to fill by April. Those roles, including environmental technicians and project managers, generally required college degrees.

Government-stimulus payments to individuals, federal loans to businesses and enhanced unemployment benefits also appeared to stoke the economy at the start of the year. Household income growth surged in January, and consumers boosted their spending 2.4% from December, the Commerce Department said. Demand for manufactured goods is also rising this year, and home sales are trending at 14-year highs.

All those factors should reinforce economic growth, especially if more people grow comfortable with leaving their homes, and start dining out and buying in-person services.

Centerline Logistics, a Seattle company that provides fuel to ships in U.S. ports, is hiring to keep up with better-than-expected demand. Volumes at ports where Centerline operates picked up last fall as the demand for consumer goods rose ahead of the holidays, and that demand has continued this year, Chief Executive Matt Godden said.

"Ships are stacked up at the port as far as the eye can see," he said.

Mr. Godden said he expects increased leisure travel later this year to result in more oil and fuel tankers arriving in ports. "We needed more workers and equipment," he added.

The company acquired six additional fuel barges late last year and is looking to add 70 workers to crew the larger fleet. The jobs start at $45,000 a year and don't require college degrees, but do require a willingness to work in the elements and the physical ability to work on a boat.

Still, millions of workers who lost their jobs last year are struggling to find work, especially in their prior fields.

Job loss also fell disproportionately on women and racial minorities because they were more likely to hold in-person service jobs that couldn't be done from home. Those workers disproportionately fell out of the workforce, likely reflecting family-care responsibilities and health concerns about returning to in-person work, economists say.

Angela Moore, a 49-year-old actor and performer, applied for unemployment benefits nearly a year ago, after her gigs quickly dried up. The benefits help to pay for the mortgage and utilities at her northern Virginia home, but little else, she said. She went without air conditioning last summer because she couldn't afford repairs.

She started a temporary job in September at a call center. That position ended in November, and Ms. Moore said her search for another job was delayed when she was diagnosed with Covid-19. Ms. Moore said she is still searching for full-time work but also faces lingering effects of her infection, including headaches, fatigue and difficulty concentrating.

"It's not that I don't want to work," she said. "But it's just in terms of the opportunities, there are a lot less...And now I feel like I have this gray cloud over me."

Write to Eric Morath at eric.morath@wsj.com

(END) Dow Jones Newswires

March 05, 2021 11:52 ET (16:52 GMT)