U.S. Reports Accelerating Job Growth
The economy generated a net 262,000 new jobs in February, one of its best showings of the Bush administration but not enough to make room for all the new job seekers, the Labor Department said Friday.
The unemployment rate edged up to 5.4% from 5.2%.
Most economists welcomed the news, and investors responded by driving stock prices broadly higher and bond yields down.
“It’s a solid report, and we can take encouragement from it,” said Mark Zandi, chief economist at consulting firm Economy.com. “It indicates that times are better for the average American worker.”
The number of new jobs, in a month that featured stormy weather on both coasts, was the greatest since October and marked only the fourth time since President Bush took office that the economy had gained as many as 250,000 jobs.
In addition to the higher unemployment rate, which after dipping in January returned to where it was in December, the Labor Department report revealed other signs of slack in the jobs market.
The average workweek for production and nonsupervisory personnel -- about 80% of the workforce -- remained unchanged from January at 33.7 hours. Zandi said that suggested that many employers could increase the hours worked by their current employees before hiring new ones.
Likewise, average weekly earnings of nonsupervisory workers held constant at $535.83, a sign that “workers still don’t have any negotiating power with their bosses,” Zandi said. He predicted that it would take an additional six months to a year of steady employment growth before the pay environment would change.
Stock markets reacted almost gleefully to the news. The Dow Jones industrial average climbed 107.52 points, or 1%, to close at 10,940.55, its highest level since June 2001.
“It was the best of all worlds for the markets: job growth but no wage pressure,” said Kathy Bostjancic, senior U.S. economist at Merrill Lynch.
Some analysts were encouraged by the breadth of February’s employment gains. Most major economic sectors added workers in February; the long-suffering manufacturing sector picked up 20,000.
A dissenting perspective came from Scott Lilly, a senior fellow at the Center for American Progress, a liberal Washington research organization. Lilly called it a sorry commentary when “unbridled enthusiasm ... is displayed for a monthly employment report that is no more than average relative to the historical rate of job growth.”
Lilly said the 262,000 new jobs represented growth of less than 0.2% in the number of working Americans, almost exactly the average of the last 50 years. The total number of jobs, 132.8 million, slightly exceeds the 132.5 million when Bush took office.
Older workers have accounted for much of the job gain over the last year.
Dean Baker, co-director of the liberal Center for Economic and Policy Research in Washington, said 918,000 of the jobs created over the last year went to workers over 55, while younger workers filled 892,000 of the positions.
Baker noted that unemployment rates rose by 0.3 percentage point for both blacks (to 10.9%) and Latinos (to 6.4%). He said the proportion of African Americans of all ages who were working fell to 56.5%, its lowest level in nearly 10 years.
The White House, by contrast, found nothing but good economic health in the new numbers.
“I’m sure there are some who will try to find a cloud in this silver lining,” said deputy White House budget director Joel Kaplan.
The number of voluntary job leavers among the unemployed jumped to 965,000 in February from 819,000 the month before. This number tends to go up as workers feel comfortable that they can find another job after leaving their current one.
Among the unemployed, job losers -- those who left their jobs against their will -- accounted for just 49.2% of all the unemployed.
The report showed earnings remained flat over the last year after adjustment for inflation. Average hourly earnings, in today’s dollars, rose a scant 2 cents in the last year, from $15.88 in February 2004 to $15.90 last month.
Economists said this piece of data would help the Federal Reserve stick to its course of raising its key short-term interest rate, now 2.5%, by 0.25 percentage point, or 25 basis points, every month or two, rather than larger increments.
“The likelihood of 50-basis-point rate moves from the Fed remains very low,” wrote the U.S. economic research group at Goldman Sachs.
Eric Goodstadt, chief marketing officer of Management Recruiters International, which specializes in finding work for middle managers in the $50,000-to-$175,000-a-year range, said unemployment was only about 2.5% in that category, with “not much room for improvement.”
At its recent peak in January 2003, the middle-management unemployment rate was 3.2%.
The middle-management layoffs of 2002 and 2003 are over, Goodstadt said. He added that job candidates, no longer begging for work, can afford to take a good look before they switch jobs.
On the other side of the equation, he said, “companies need to develop retention strategies. Employees aren’t necessarily happy just to have a job. Job jumping is growing.”
Middle managers are particularly needed in the healthcare and financial sectors, Goodstadt said.
