U.S. payrolls swell by 243,000

Jobless rate nudges up to 4.8% as more people enter work force

March 11, 2006|By JOEL HAVEMANN | JOEL HAVEMANN,LOS ANGELES TIMES

WASHINGTON -- Jobs grew at a healthy clip in February, the government reported yesterday, helping boost payrolls to their highest annual increase in more than four years while encouraging more jobless to re-enter the labor force.

The stronger-than-predicted net increase of 243,000 jobs was the largest gain in any of the past 12 months except for last November, when the economy was shaking off the effects of Hurricane Katrina.

It compared to revised increases of 170,000 jobs in January and 145,000 in December, the Labor Department reported. Economists had forecast a net boost of 210,000 positions for February.

As more unemployed sought work, the jobless rate rose to 4.8 percent in February from a 4 1/2 -year low of 4.7 percent in January.

"The U.S. labor market is strong but not booming," said David Kelly, economic adviser for Putnam Investments in Boston.

Many economists said the latest report reinforced predictions that the Federal Reserve would raise its benchmark short-term interest rate in two more quarter-point increments to 5 percent. But they said the report also provided new reasons to stop there.

"There is no justification for the Fed to push its benchmark rate beyond 5 percent," said Bernard Baumohl, executive director of the Economic Outlook Group in Princeton, N.J. He pointed to strong growth in worker productivity and a weakening housing sector as forces that would make still higher interest rates unnecessary as anti-inflation measures.

Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pa., said the jobs report added to evidence that the economy is growing at an annual rate of more than 4 percent in the first quarter, higher than its historical average.

Two more Fed rate increases could temper that growth rate and prevent a new round of inflation, while keeping the unemployment rate at or below 5 percent, Zandi said.

The report signaled that wage growth, which has lagged behind inflation even as the unemployment rate has tumbled, finally might be making a comeback.

Consumer prices rose 4 percent in the 12 months that ended in January.

Polls show most Americans remain dissatisfied with the economy. Kelly of Putnam Investments suggested that this is because the jobs rebound has passed by many people.

The most obvious gap, he said, is in the manufacturing sector. It lost 1,000 jobs in February while all other sectors were gaining, and lost 48,000 workers over the past 12 months. The sector accounts for barely one job in 10 in the United States.

The Northeast and Midwest have seen relatively slow job growth, Kelly said. Michigan has lost jobs since the national jobs boom began in mid-2003, and Maine, Massachusetts and Ohio have grown by less than 1 percent.

And less well-educated workers have fared poorly. Since mid-2003, Kelly said, overall per capita personal income has grown by 12.6 percent, but the average hourly earnings of production workers and nonsupervisory personnel has risen by only 6.6 percent.

Administration officials and congressional Republicans read the report as a vindication of their tax cuts. "Today's solid employment number is a vivid reminder that our economy is off to a strong start in 2006," Commerce Secretary Carlos Gutierrez said in a statement. "Our policies are working."

At the current rate of growth, jobs would increase by 4.3 million by the end of this year. But that would still be fewer than during any of the four Congresses during the Bill Clinton administration, when tax rates were rising, not falling.

Joel Havemann writes for the Los Angeles Times.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.