Unemployment holds at 9.7%; job market seen healing

WASHINGTON - The unemployment rate held at 9.7 percent last month as employers shed 36,000 jobs, fewer than expected. The figures, released Friday, suggested the job market is slowly healing but that significant hiring has yet to occur.

Nigel Gault, chief economist at IHS Global Insight, said private employers will probably add jobs in March and continue to generate jobs through 2010.

Confidence in the labor market's prospects is starting to filter through to households.

The Federal Reserve reported Friday that consumer borrowing rose by $4.96 billion in January, surprising economists who were looking for borrowing to decline by $4.5 billion.

The gain broke a record stretch of 11 straight declines with a small increase in January as a boost in auto loans offset continued weakness in credit card borrowing.

The gain, the largest increase since July 2008, could be a signal that Americans are regaining confidence in the economy and are beginning to feel more confident about boosting their spending and increasing debt.

That development is seen as critical to providing support to the overall economy.

The Labor Department would not quantify how snowstorms that hammered the East Coast last month affected job losses. Economists said the storms probably inflated job losses but by less than predictions of 100,000 or more. Without the storms, the economy probably would have seen a net jobs gain for only the second time since the recession began two years ago.

Nearly 14.9 million Americans are unemployed - almost twice the total when the recession began.

Some economists said the data suggest that the unemployment rate may have peaked.

"We're on the cusp of some job growth, finally, finally," said Stuart Hoffman at PNC Financial Services Group.

The report cheered Wall Street, too. The Dow Jones industrial average surged 122 points.