Job Growth Surged and Wages Rose in March Data
JEREMY W. PETERS
Published April 7, 2007
It just keeps going.
The job market showed little sign of losing its vigor last month as wages climbed and job growth rose, the Labor Department reported yesterday.
Economists said the numbers were consistent with an economy that was being supported by strong consumer spending, with considerable hiring in businesses like restaurants, bars, department stores and educational services.
In all, the Labor Department said that employment outside the farming sector grew by 180,000 in March. And in another sign of the job market’s resilience, employment growth in January and February was stronger than the government first reported.
The national unemployment rate also edged down last month to 4.4 percent, from 4.5 percent, matching a five-year low that it reached briefly in October.
With the economy showing signs of imbalance elsewhere — in the housing market, in business investment and in worker productivity — the job market has been the area that continues to show momentum despite a broader slowdown.
“Sometimes the pieces of the puzzle don’t fit together the way you’d expect them to,” said Jared Bernstein, an economist with the Economic Policy Institute. “And it’s the tireless American consumer who’s keeping the job market moving forward.”
The employment report offered a reason for consumers’ continued free spending: their incomes keep going up. The average hourly earnings for workers rose 4 percent in March compared with those a year earlier, to $17.22 an hour.
The jobs report appeared to confirm the Federal Reserve’s outlook for moderate economic growth, dimming hopes that interest rates will come down anytime soon. With wages increasing at a strong pace and the unemployment rate so low, the Fed is likely to continue to focus on rising inflation as the biggest threat to the economy. The yield on the United States Treasury’s 10-year note reflected this, rising to the highest level in eight weeks in a session that was shortened because of Good Friday.
While consumers are spending more, much of that money is borrowed. The Federal Reserve reported yesterday that consumer debt rose in February by $2.97 billion to a record $2.41 trillion. Americans are putting more of that debt on credit cards. The Fed’s measure of revolving debt, which includes credit cards, rose $2.494 billion, after rising $1.229 billion in January.
As the case has been for the last several months, the employment report was not only solid, but it showed that employers were even busier hiring in previous months than the government first estimated. The latest figures showed 32,000 jobs that were not included in the employment tallies for January and February.
“The fact of the matter is the job market is very, very healthy,” said Joshua Shapiro, chief economist of MFR. “And it’s not like this is a fluky one-off thing. There’s a whole host of evidence about the labor market that points to strength.”
Only a few pockets of the job market last month showed any softness. Manufacturing continued to shed workers, eliminating some 16,000 jobs. That was the largest of any sector, and the losses came primarily from the assembly line. Real estate renting and leasing services cut 5,200 jobs; telecommunications businesses cut 6,200.
But construction, which has been hit by a slowdown in residential real estate, added 56,000 jobs after cutting 67,000 the month before. Of those new jobs, 45,200 were in the specialty trade contractor business. And most of those — 34,200 jobs — were in nonresidential contracting.
Most of the hiring last month was in businesses that typically get a lift when consumers spend freely. Retail businesses added 35,900 jobs, almost all of those in department stores, discount warehouses and other general merchandise outlets. Gains in those businesses helped offset job losses in building supplies stores, furniture stores and automobile dealerships. Restaurants and bars hired 19,000 new workers.
Doctors’ offices, hospitals and other health care service providers added 29,500 jobs. New jobs in educational services totaled 15,800.
Economists said this level of job growth suggested that any spillover from the housing downturn had been limited so far.
“If businesses were really losing confidence in the outlook, and if we were heading for a major downturn, then they’d be pulling back across the board,” said Nigel Gault, chief United States economist for Global Insight.
Other measures of the job market showed signs of strengthening as well. The employment-population ratio, the percentage of Americans who are working, rose to 63.3 percent, from 63.2 percent in February.
But some economists pointed to possible anomalies in the data and suggested that the jobs numbers might not be as strong as they look. One factor that raised some eyebrows was that the strength in the retail sector was almost exclusively in general merchandise stores.
“That kind of sticks out like a sore thumb,” said Richard F. Moody, chief economist of Mission Residential, a real estate investment firm. “It’s hard to explain a jump that large in one month. And in terms of sustainable job growth, it doesn’t really fit the bill.”
Others pointed to possible distortions in the data for construction. “Employment in residential construction is down by only 3 percent over the last year, even though construction is down by almost 20 percent,” Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said in a report. “Either productivity in the sector is crashing or, more likely, the data are not reflecting real employment trends.”
In general, however, economists took the Labor Department report as a sign that growth will remain steady, prompting the Fed to hold interest rates at 5.25 percent for the foreseeable future. After yesterday’s report, Goldman Sachs pushed back, to September, its estimate for when the Fed will lower rates. “It appears that it will take a bit longer to see the extent of weakening that would convince the Fed to ease,” a group of economists from the investment bank said in a research note.
Published April 7, 2007
It just keeps going.
The job market showed little sign of losing its vigor last month as wages climbed and job growth rose, the Labor Department reported yesterday.
Economists said the numbers were consistent with an economy that was being supported by strong consumer spending, with considerable hiring in businesses like restaurants, bars, department stores and educational services.
In all, the Labor Department said that employment outside the farming sector grew by 180,000 in March. And in another sign of the job market’s resilience, employment growth in January and February was stronger than the government first reported.
The national unemployment rate also edged down last month to 4.4 percent, from 4.5 percent, matching a five-year low that it reached briefly in October.
With the economy showing signs of imbalance elsewhere — in the housing market, in business investment and in worker productivity — the job market has been the area that continues to show momentum despite a broader slowdown.
“Sometimes the pieces of the puzzle don’t fit together the way you’d expect them to,” said Jared Bernstein, an economist with the Economic Policy Institute. “And it’s the tireless American consumer who’s keeping the job market moving forward.”
The employment report offered a reason for consumers’ continued free spending: their incomes keep going up. The average hourly earnings for workers rose 4 percent in March compared with those a year earlier, to $17.22 an hour.
The jobs report appeared to confirm the Federal Reserve’s outlook for moderate economic growth, dimming hopes that interest rates will come down anytime soon. With wages increasing at a strong pace and the unemployment rate so low, the Fed is likely to continue to focus on rising inflation as the biggest threat to the economy. The yield on the United States Treasury’s 10-year note reflected this, rising to the highest level in eight weeks in a session that was shortened because of Good Friday.
While consumers are spending more, much of that money is borrowed. The Federal Reserve reported yesterday that consumer debt rose in February by $2.97 billion to a record $2.41 trillion. Americans are putting more of that debt on credit cards. The Fed’s measure of revolving debt, which includes credit cards, rose $2.494 billion, after rising $1.229 billion in January.
As the case has been for the last several months, the employment report was not only solid, but it showed that employers were even busier hiring in previous months than the government first estimated. The latest figures showed 32,000 jobs that were not included in the employment tallies for January and February.
“The fact of the matter is the job market is very, very healthy,” said Joshua Shapiro, chief economist of MFR. “And it’s not like this is a fluky one-off thing. There’s a whole host of evidence about the labor market that points to strength.”
Only a few pockets of the job market last month showed any softness. Manufacturing continued to shed workers, eliminating some 16,000 jobs. That was the largest of any sector, and the losses came primarily from the assembly line. Real estate renting and leasing services cut 5,200 jobs; telecommunications businesses cut 6,200.
But construction, which has been hit by a slowdown in residential real estate, added 56,000 jobs after cutting 67,000 the month before. Of those new jobs, 45,200 were in the specialty trade contractor business. And most of those — 34,200 jobs — were in nonresidential contracting.
Most of the hiring last month was in businesses that typically get a lift when consumers spend freely. Retail businesses added 35,900 jobs, almost all of those in department stores, discount warehouses and other general merchandise outlets. Gains in those businesses helped offset job losses in building supplies stores, furniture stores and automobile dealerships. Restaurants and bars hired 19,000 new workers.
Doctors’ offices, hospitals and other health care service providers added 29,500 jobs. New jobs in educational services totaled 15,800.
Economists said this level of job growth suggested that any spillover from the housing downturn had been limited so far.
“If businesses were really losing confidence in the outlook, and if we were heading for a major downturn, then they’d be pulling back across the board,” said Nigel Gault, chief United States economist for Global Insight.
Other measures of the job market showed signs of strengthening as well. The employment-population ratio, the percentage of Americans who are working, rose to 63.3 percent, from 63.2 percent in February.
But some economists pointed to possible anomalies in the data and suggested that the jobs numbers might not be as strong as they look. One factor that raised some eyebrows was that the strength in the retail sector was almost exclusively in general merchandise stores.
“That kind of sticks out like a sore thumb,” said Richard F. Moody, chief economist of Mission Residential, a real estate investment firm. “It’s hard to explain a jump that large in one month. And in terms of sustainable job growth, it doesn’t really fit the bill.”
Others pointed to possible distortions in the data for construction. “Employment in residential construction is down by only 3 percent over the last year, even though construction is down by almost 20 percent,” Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said in a report. “Either productivity in the sector is crashing or, more likely, the data are not reflecting real employment trends.”
In general, however, economists took the Labor Department report as a sign that growth will remain steady, prompting the Fed to hold interest rates at 5.25 percent for the foreseeable future. After yesterday’s report, Goldman Sachs pushed back, to September, its estimate for when the Fed will lower rates. “It appears that it will take a bit longer to see the extent of weakening that would convince the Fed to ease,” a group of economists from the investment bank said in a research note.
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