Employment data lift hopes but where are the jobs?
AP Economics Writers
WASHINGTON (AP) – At last, the unemployment crisis seems to be easing. That’s the good news.
The bad news? Job creation remains scant because companies still lack enough confidence in the economy to ramp up hiring.
The U.S. jobless rate held steady at 9.7 percent in February. And employers cut 36,000 jobs – fewer than predicted. Those figures signaled that the job market is slowly healing.
Some economists said the jobless rate may have peaked and predicted the employment report for March will kick off a string of monthly job gains.
“We’re on the cusp of some job growth, finally, finally,” said Stuart Hoffman, chief economist at PNC Financial Services Group.
The Labor Department report issued Friday cheered Wall Street, too. The Dow Jones surged 122 points, or about 1.2 percent.
But there’s a long way to go. The recession eliminated about 8.4 million jobs. The slow-motion recovery means hiring is expected to remain feeble for the rest of the year – at most a net gain averaging about 100,000 a month.
To put that in perspective, about 125,000 new jobs are needed each month just to keep up with population growth and prevent the unemployment rate from rising.
To reduce the jobless rate significantly, employers would need to create 200,000 to 300,000 jobs a month. But most of them are waiting to see stronger sales, more spending by consumers and businesses, and a more vigorous global rebound to stimulate demand for U.S. goods and services.
Clifford Adkins of ARC Products LLC in suburban St. Louis, which makes gurneys to evacuate buildings, would like to hire. He said he doesn’t need to see a prolonged boost in sales. He would hire if even a few of the government agencies and schools he serves step up spending.
But orders are falling. His cash flow just can’t support new workers.
“I think if orders started coming in, I’d immediately start using that cash to put (salespeople) on the street,” he said.
Some encouraging signs that consumers are more willing to spend emerged in reports earlier this week. Shoppers hit the malls and spent more freely in February. And activity in both the manufacturing and services industries of the economy is growing.
The jobs picture is gradually brightening at a time when the U.S. economic rebound is faring better than Europe’s. The 16 nations that use the euro currency scarcely grew in the fourth quarter, scratching out a 0.1 percent gain. Spain is suffering from 18.8 percent unemployment.
Still, the U.S. economy is lagging behind those in Asia. Economies such as China and South Korea largely escaped the downturn that followed the 2008 financial crisis. China’s economy grew a sizzling 8.7 percent last year.
Federal Reserve Chairman Ben Bernanke and most economists are forecasting only a modest rebound. That’s why economists say it could take at least four years to restore the 8.4 million jobs wiped out by the worst recession since the 1930s. It could take even longer for the jobless rate to drop back down to a normal 5.5 percent to 6 percent.
Most economists had expected the unemployment rate to rise to 9.8 percent in February. In October, the rate hit 10.1 percent, a 26-year high. Some experts now think that might have marked the peak. Others note that if people who stopped looking for work resume their job searches, the rate could tick up.
In February, 1.2 million people abandoned their job searches – 473,000 more than did so in February a year ago.
All told, nearly 14.9 million Americans are now unemployed. That’s nearly twice as many as when the recession began in December 2007.
Evidence of the fierce competition for jobs was seen in a rise in the so-called under-employment rate, which includes the unemployed, plus those who have given up looking for work and those who are working part-time but would prefer to work full-time. The under-employment rate rose to 16.8 percent, from 16.5 percent in January.
Doubts about last month’s data arose because winter storms that pounded the Eastern half of the country occurred on the same week that the government surveys businesses about their payrolls.
Employees who could not make it to work and were not paid were not included on those payrolls. On the other hand, people who worked even one hour were counted as employed. That’s the way the government has always calculated a net loss or gain in jobs.
Without the storms, the economy likely would have seen a net jobs gain in February for only the second time since the recession began.
Economists and investors were relieved that the job losses turned out to be just 36,000. That was larger than January’s revised loss of 26,000 jobs, but it marked a huge improvement from last February, when employers slashed 726,000 jobs.
Anxiety over unemployment has intensified pressure on President Barack Obama and his Democratic Party in a congressional election year. Congress is close to completing legislation to give tax breaks to companies that hire the jobless.
Obama called the jobs report “better than expected.” Even so, he said the number of unemployed Americans is “more than we should tolerate” and pushed Congress to pass the jobs bill.
Economists worry about how the economy – and job creation – will fare once the government’s stimulus spending ends later this year. The odds are low that the economy will slip back into recession. But Bernanke and other economists will not rule it out.
“Businesses are more cautious about hiring at this stage of the economic recovery compared to previous episodes,” said Sung Won Sohn, economist at California State University. “In an increasingly global economy facing steep competition, employers want to stay lean and mean.”
AP Business Writers Mae Anderson in New York, Christopher Leonard in St. Louis and Jordan Robertson in San Francisco contributed to this report.