Unemployment Down, Opportunities Down

The nation's unemployment rate dipped to 4.5 percent in February even as big losses of construction and factory jobs restrained overall payroll growth. Wages grew briskly.

The latest snapshot, released by the Labor Department on Friday, offered a mixed picture of the employment climate.

The slight decline in the politically prominent jobless rate, from 4.6 percent in January, came as hundreds of thousands of people left the work force for various reasons.

Employers, meanwhile, added 97,000 new jobs to their payrolls in February, the fewest in two years, as bad winter weather forced construction companies to slash 62,000 jobs, the most since 1991. Factories, feeling the strain of the troubled housing and auto industries, also continued to cut jobs.

Job gains in December and January turned out to be stronger than previously estimated, with 226,000 and 146,000 new jobs being created respectively.

The new tally of jobs added to the economy in February was close to economists' forecast for a gain of around 100,000. They had predicted the unemployment rate would hold steady at 4.6 percent.

Meanwhile, the trade deficit narrowed slightly in January as U.S. exports rose to an all-time high while imports dropped, sending a hopeful signal that the country's trade imbalances may finally start to improve this year.

The Commerce Department reported Friday that the gap between what America sells abroad and what it imports fell to $59.1 billion in January, down by 3.8 percent from a December deficit of $61.5 billion.

Workers' wages grew quickly last month.

Average hourly earnings rose to $17.16, a 0.4 percent increase from January. That was slightly faster than the 0.3 percent gain economists were expecting. Over the 12 months ending in February, wages grew by 4.1 percent.

Strong wage growth is welcome by workers and supports consumer spending, a key ingredient to the country's economic health. But a rapid pickup — if sustained and not blunted by other economic forces — can raise fears about inflation. Spiraling inflation would whittle away any wage gains, hurting workers' wallets, and isn't good for the overall economy, either.

The new employment figures come as President Bush continues to get lukewarm ratings for his economic stewardship. Just 41 percent of the public approves of the president's handling of the economy, compared with 57 percent who disapprove.

Democrats, who accuse Mr. Bush of not doing enough to close the gap on economic inequality, say a top priority is getting final agreement in Congress on legislation to boost the federal minimum wage from $5.15 an hour to $7.25 an hour. The wage hasn't budged for nearly 10 years. Democrats also are pushing legislation making it easier for workers to start unions against company wishes.

Although construction companies and factories eliminated jobs last month, other employers, including health care providers, financial firms and retailers boosted hiring.

Analysts expect the unemployment rate, which dropped to a six-year low of 4.6 percent last year, will creep up this year as economic growth slows. Some believe the jobless rate could climb to close to 5 percent by the end of this year. The economy expanded by 3.3 percent last year, the best showing in two years. Growth, however, is expected to ebb to around 2.7 percent for all of 2007.

The improvement in the trade deficit came despite the fact that the politically sensitive deficit with China shot up by 12 percent to $21.3 billion, a development certain to increase pressure on the administration to deal with what critics see as China's unfair trade practices.

Exports of goods and services rose by 1.1 percent to an all-time high of $126.7 billion in January, reflecting gains in sales of American airplanes, computers and farm products such as soybeans and wheat.

Imports declined a slight 0.5 percent to $185.8 billion. Shipments of foreign cars, clothing, televisions and toys and games all were down. These declines offset a 5.4 percent increase in America's foreign oil bill, which rose 5.4 percent to $24.5 billion in January.

The trade deficit has set records for five straight years, reaching $765.3 billion in 2006 with one-third of that amount accounted for by the imbalance with China, which jumped to $232.5 billion last year, the largest trade gap ever recorded with a single country.

Those rising trade deficits have come as America has lost 3 million manufacturing jobs since President Bush took office in January 2001, losses that critics blame in part on the soaring trade deficits.