February 11, 2009 5:04 PM
- Text
Employers Adding To Payrolls And Paychecks
(CBS/AP)
America's employers ramped up hiring in March, driving the unemployment rate down to a five-month low.
"The Labor Department report was a bit of a surprise — the unemployment rate came down, to 4.4 percent and total number of people added to payrolls went up," Peter Sperling, professor of finance and economy at Touro College, told CBS News' Phyllis McQuillan.
The new snapshot, released by the Labor Department on Friday, also showed that companies boosted their payrolls by a strong 180,000 in March, the most since December. Workers also saw their paychecks get bigger. The fresh figures suggested that companies are not feeling a need to dramatically clamp down on hiring in the face of the slower overall economic activity and the deep housing slump.
"There's been worry that housing troubles would seep into the rest of the economy and hurt jobs but that is not happening now," said Bill Cheney, chief economist at John Hancock Financial Services. "This says employers are finding that they need people and when they need people they hire them. These are good, healthy numbers," he said.
"The economy may have slowed a bit in the last three to six months, but employers are still hiring people at a pretty nice rate and there is no sign the economy is starting to tail off," agreed Sperling.
The report was stronger than economists were expecting. They were calling for the economy to add around 135,000 new jobs in March, and for the unemployment rate to actually edge up to 4.6 percent.
The 4.4 percent unemployment rate, which dropped down a notch from 4.5 percent in February, matched the rate in October.
Jobs gains in March were fairly widespread, except for the struggling manufacturing sector, which continued to shed jobs for the ninth month in a row; factories cut 16,000 in March alone. Some business services also trimmed jobs, by 7,000 last month.
Construction companies, after suffering heavy job losses in February in part due to lousy winter weather, bulked up in March. They added 56,000 positions last month, the most in just over a year. Retailers added nearly 36,000 jobs last month. Education and health care services expanded employment by 54,000. Leisure and hospitality picked up 21,000 new jobs, while the government added 23,000.
Adding to the positive showing, job gains in January and February turned out to be stronger than previously reported. The economy added 113,000 positions in February, up from a prior estimate of just 97,000, which had marked the slowest job growth in two years. In January 162,000 new jobs were created, better than the 146,000 previously reported.
Workers' wages grew modestly.
Average hourly earnings rose to $17.22 in March, a 0.3 percent increase from February. That matched economists' expectations. Over the last 12 months, wages grew by 4 percent.
Solid wage growth is good for workers and supports consumer spending, which is indispensable to the economy's good health. But a rapid pickup — if prolonged and not blunted by other economic forces — can raise fears about inflation.
Spiraling inflation would whittle away any wage gains, hurting workers' wallets. It isn't good for the economy, either.
"The most interesting thing about the job report is that it suggests that the Federal Reserve System is unlikely to lower interest rates anytime in the near term," said Sperling.
One of the things the Federal Reserve is keeping close tabs on is inflation. Another is business investment, which has been weak. Those economic crosscurrents complicate the Fed's job of keeping the economy and inflation on an even keel.
The Fed's key interest rate hasn't moved since August. Before that, the Fed was steadily raising rates for two years to fend off inflation.
The new figures comes as President Bush continues to cope with a lackluster job-approval rating of 35 percent from the American public, according to a new AP-Ipsos poll. On the economy, the just 38 percent approve of the president's economic stewardship, while 60 percent disapprove, the poll shows.
Tapping into that discontent, Democrats are championing policies to close the gap between low- and high-income workers, make it easier for workers to form unions against company wishes and taking a harder stance with respect to the Bush administration's free-trade deals.
Beyond March's employment report, there were some challenges for jobseekers, however. For one thing, the job hunt got longer.
The average time that the 6.7 million unemployed people spent in their job searches was 17.3 weeks in March, compared with 16.4 weeks in February.
Economists predict the economy will remain in a sluggish spell in the months ahead. For the recently ended January-to-March quarter, some analysts are predicting growth will clock in at close to 2 percent, which would represent a further slowing from the 2.5 percent growth rate logged in the final three months of last year.
As the economy slows, the unemployment rate also is expected to creep up, reaching close to 5 percent by the end of the year.
Federal Reserve Chairman Ben Bernanke believes the economy is working its way through a soft patch and won't fall into a recession this year. However, former Fed chief Alan Greenspan has put the odds of the economy sliding into a recession this year at one-in-three.
"The Labor Department report was a bit of a surprise — the unemployment rate came down, to 4.4 percent and total number of people added to payrolls went up," Peter Sperling, professor of finance and economy at Touro College, told CBS News' Phyllis McQuillan.
The new snapshot, released by the Labor Department on Friday, also showed that companies boosted their payrolls by a strong 180,000 in March, the most since December. Workers also saw their paychecks get bigger. The fresh figures suggested that companies are not feeling a need to dramatically clamp down on hiring in the face of the slower overall economic activity and the deep housing slump.
"There's been worry that housing troubles would seep into the rest of the economy and hurt jobs but that is not happening now," said Bill Cheney, chief economist at John Hancock Financial Services. "This says employers are finding that they need people and when they need people they hire them. These are good, healthy numbers," he said.
"The economy may have slowed a bit in the last three to six months, but employers are still hiring people at a pretty nice rate and there is no sign the economy is starting to tail off," agreed Sperling.
The report was stronger than economists were expecting. They were calling for the economy to add around 135,000 new jobs in March, and for the unemployment rate to actually edge up to 4.6 percent.
The 4.4 percent unemployment rate, which dropped down a notch from 4.5 percent in February, matched the rate in October.
Jobs gains in March were fairly widespread, except for the struggling manufacturing sector, which continued to shed jobs for the ninth month in a row; factories cut 16,000 in March alone. Some business services also trimmed jobs, by 7,000 last month.
Construction companies, after suffering heavy job losses in February in part due to lousy winter weather, bulked up in March. They added 56,000 positions last month, the most in just over a year. Retailers added nearly 36,000 jobs last month. Education and health care services expanded employment by 54,000. Leisure and hospitality picked up 21,000 new jobs, while the government added 23,000.
Adding to the positive showing, job gains in January and February turned out to be stronger than previously reported. The economy added 113,000 positions in February, up from a prior estimate of just 97,000, which had marked the slowest job growth in two years. In January 162,000 new jobs were created, better than the 146,000 previously reported.
Workers' wages grew modestly.
Average hourly earnings rose to $17.22 in March, a 0.3 percent increase from February. That matched economists' expectations. Over the last 12 months, wages grew by 4 percent.
Solid wage growth is good for workers and supports consumer spending, which is indispensable to the economy's good health. But a rapid pickup — if prolonged and not blunted by other economic forces — can raise fears about inflation.
Spiraling inflation would whittle away any wage gains, hurting workers' wallets. It isn't good for the economy, either.
"The most interesting thing about the job report is that it suggests that the Federal Reserve System is unlikely to lower interest rates anytime in the near term," said Sperling.
One of the things the Federal Reserve is keeping close tabs on is inflation. Another is business investment, which has been weak. Those economic crosscurrents complicate the Fed's job of keeping the economy and inflation on an even keel.
The Fed's key interest rate hasn't moved since August. Before that, the Fed was steadily raising rates for two years to fend off inflation.
The new figures comes as President Bush continues to cope with a lackluster job-approval rating of 35 percent from the American public, according to a new AP-Ipsos poll. On the economy, the just 38 percent approve of the president's economic stewardship, while 60 percent disapprove, the poll shows.
Tapping into that discontent, Democrats are championing policies to close the gap between low- and high-income workers, make it easier for workers to form unions against company wishes and taking a harder stance with respect to the Bush administration's free-trade deals.
Beyond March's employment report, there were some challenges for jobseekers, however. For one thing, the job hunt got longer.
The average time that the 6.7 million unemployed people spent in their job searches was 17.3 weeks in March, compared with 16.4 weeks in February.
Economists predict the economy will remain in a sluggish spell in the months ahead. For the recently ended January-to-March quarter, some analysts are predicting growth will clock in at close to 2 percent, which would represent a further slowing from the 2.5 percent growth rate logged in the final three months of last year.
As the economy slows, the unemployment rate also is expected to creep up, reaching close to 5 percent by the end of the year.
Federal Reserve Chairman Ben Bernanke believes the economy is working its way through a soft patch and won't fall into a recession this year. However, former Fed chief Alan Greenspan has put the odds of the economy sliding into a recession this year at one-in-three.
Latest Now in MoneyWatch
- Ohio unemployment hits 3-year-low
- Jill on Money: Retirement investing, allocation, long term care
- Could "web-lining" be dangerous?
- Insurers respond cautiously to contraceptive plan
- Judge: Legally, breastfeeding not related to pregnancy
- Budget deficit drops to $27 billion in January
- Why the Powerball Jackpot is part of my investment strategy
- Is the new VW Beetle diesel worth the money?
- Consumer sentiment highlights risks to recovery
- Valentine blues? 10 best cities to be single
- December trade deficit widens to $48.8 billion
- Alcatel-Lucent returns to profit in 2011
- 6 things never to say in a performance review
- $26B mortgage deal: Who gets the money?
- Friendly's CEO steps down
- Quarterly loss hits $3.3B at Postal Service
- Greeks rail against cuts as EU demands more
Latest CBS News Headlines
on Facebook Most Discussed Stories
on CBS News
- Top Republican wants vote on birth control mandate
- McConnell: Contraceptive issue "will not go away"
- Fuel removal under way on Italy cruise ship
- USAID contractor case renews debate on tactics
on Facebook Most Discussed Stories
on CBS News
