Advertisement

Archive for Saturday, November 8, 2003

We’re back on a rising job track’

November 8, 2003

Advertisement

— The economy has created nearly 300,000 new jobs in the past three months after a half-year drought, pushing the unemployment rate down to 6 percent in October and leaving little doubt that the jobs market is bouncing back.

The Labor Department reported Friday that payrolls grew by 126,000 last month, more than economists had predicted. That followed a revised 125,000 new jobs in September, more than double what initially was reported. U.S. companies added 35,000 to their payrolls in August.

October's job gains were in a range of service industries, including temporary employment, health care, social work, education, retail, leisure and hospitality, law and accounting.

"We can finally put the nail in the coffin of the jobless recovery," said Ken Mayland, president of ClearView Economics. "We are back on a rising job track."

But many of the new jobs were part-time or in low-paying industries, causing some economists to temper their enthusiasm over Friday's report. The jobless rate's decline to a six-month low -- from the standstill 6.1 percent of the previous three months -- initially buoyed Wall Street.

The jobs market has been a weak link in the recovery, with companies hesitant to hire new, full-time workers out of concern that the improvements wouldn't last.

"I think we've finally shifted from jobless recovery to sustained expansion," said Bill Cheney, chief economist at John Hancock Financial Services Inc. The report is "the one we've been waiting for, providing unambiguous good news about the labor market."

The improvement could benefit President Bush's re-election effort. Democrats had hoped to use the lack of new jobs as a political issue to win back the White House next year.

"The economy continues to grow and jobs are being created. It's another positive sign for America's workers and families," said White House spokesman Scott McClellan. "But we cannot be complacent."

For many jobseekers, the employment outlook still isn't rosy.

The new jobs added last month mostly were in lower-paying industries such as retail and temporary employment firms. Average weekly earnings in those sectors are $366 and $318 respectively, said John A. Challenger, chief executive officer of Challenger, Gray and Christmas, an employment research and recruiting firm. The national average is $521 per week.

Also, 1.4 million workers were only able to find part-time work, up 27 percent from a year ago. To make ends meet, 7.5 million Americans worked two or more jobs last month, up from 7.3 million a year ago.

One of four people out of work were unemployed for 27 weeks or longer last month. Nearly half of those were white-collar workers in management, professional, sales and office jobs, Challenger said.

The hard-hit manufacturing sector continued to shed jobs in October, losing 24,000. It was the 37th consecutive month of declines, though the pace has slowed considerably.

For blacks, the jobless rate climbed three-tenths of a percentage point last month to 11.5 percent. The rate fell for whites, Hispanics, Asians, men and women.

"It's quite alarming that the Bush administration is celebrating ... a very, very minuscule decrease in the overall unemployment rate while African-Americans are still standing in the unemployment line," said Rep. Elijah Cummings, D-Md., chairman of the Congressional Black Caucus.

"I see nothing to celebrate in these numbers," he said.

A Democrat-led effort in the GOP-controlled Congress to pass another extension of unemployment benefits probably will fail, Cummings said.

Federal Reserve Chairman Alan Greenspan struck an optimistic tone about the employment outlook in a Thursday speech to the Securities Industry Association, saying hiring was expected to rebound.

The Fed has left a key short-term interest rate it controls at a 45-year low of 1 percent, and Greenspan repeated assurances that the central bank will not feel the need to quickly start raising interest rates at the first signs of economic growth.

October's employment report is a positive prelude to the holiday season, economists said. Consumer confidence should spike, making shoppers more willing to open their wallets. That will help reduce business inventory and lead to more new jobs.

Commenting has been disabled for this item.