Sat, Mar 09, 2002 - Page 17 News List

US workers returning to their jobs

UNEMPLOYMENT DATA Stronger-than-expected jobless data means the US Federal Reserve may begin to hike interest rates again later this year


US employment grew for the first time in seven months, beating expectations, as the jobless rate fell for a second straight month, the US government said yesterday in the latest signal of economic recovery.

The Labor Department said the jobless rate declined to 5.5 percent in February from 5.6 percent in the previous month.

That drop came as a rise in retail employment, boosted by seasonal forces, helped add 66,000 jobs to payrolls outside the farm sector -- the first addition to payrolls since a mild 18,000 gain during July of last year. February's gains followed job losses of 126,000 in January, worse than the previously reported 89,000 job losses.

The report adds to expectations that the Federal Reserve will shift its stance on the balance of risks in the US economy at its March 19 meeting to signal that it may start to increase interest rates as early as the middle of the year.

But with the recovery in its early stages, the central bank will be wary of choking off the recovery too early, especially until the job market has returned to full strength.

A sell-off in the Treasury bond market sparked by Fed Chairman Alan Greenspan's relatively rosy assessment of the economy on Thursday continued after the employment data.

The American economy has shed more than 1.4 million jobs since the recession began a year ago. Highlighting how badly the economy was hammered by the Sept. 11 attacks, 1.2 million of those job losses came between September and January.

The dip in the unemployment rate came as more than 800,000 Americans rejoined the workforce. Indeed, the report, albeit boosted by special factors, was stronger than most expected. Economists in a Reuters poll had forecast a 13,000 payrolls increase and a higher unemployment rate at 5.8 percent.

Take this job and love it

* February's payroll gains were driven by a 58,000 addition in retail jobs.

* The service-producing sector added 97,000 jobs.

* Construction businesses added 25,000 positions.

* But the manufacturing sector, which has been in recession for the past two years, lost 50,000 jobs last month.

"This definitely keeps alive the prospect of a stronger-than-expected bounce in the US economy going into the second half of the year," said Andrew Delano, currency analyst for IdeaGlobal in New York.

"There is a little bit of fresh hiring out there. And I think that's a very good sign that the labor market has stabilized and is poised to bounce a little," he added.

But the report showed some constraints still in the labor market with employers keeping costs low. The length of the average work week was unchanged at 34.1 hours and average hourly earnings rose a slim 0.1 percent to US$14.63.

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