US economy poised in second month of strong job gains
Economists expect the nation added 185,000 jobs last month, and the unemployment rate stayed at 8.9 percent. That would follow February’s strong gains of 192,000 jobs — the most in almost a year.
If forecasts prove roughly accurate, February and March will mark the best two-month stretch for private-sector hiring since the recession began.
“The labor market recovery is gathering momentum,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, said. Hiring has picked up as unemployment applications have dropped, he said, “and we think there is more to come.”
Manufacturing firms are growing at their fastest pace in seven years. Large companies are also stepping up their hiring plans, according to a survey of big multinational corporations released Wednesday.
Most economists expect the private sector added at least 200,000 new jobs, offsetting anticipated cuts made by state and local government. An increase of 200,000 would also raise the average private-sector job gain in the first three months of the year to 163,000, the fastest three-month pace since January 2007.
Small businesses are increasingly confident about the business outlook and are finding it easier to get credit, said John Ryding, chief economist at RDQ Economics.
And many companies that were reluctant to hire earlier in the recovery, fearing the rebound wouldn’t last, are finally taking the plunge and adding new workers, he said.
“There comes a point where people have to commit to more hiring and expand,” Ryding said.
Analysts predict the economy will add jobs at roughly the same pace for the rest of this year, generating about 2.5 million new positions. Still, that will only make up for a portion of the 7.5 million jobs that have been lost since the recession began in December 2007.
The unemployment rate is at its lowest point since April 2009, having dropped nearly a full percentage point in three months. Still, one reason for the lower unemployment rate is that many people who stopped looking for a job during the recession still aren’t looking for one. So they’re not counted as unemployed.
The proportion of people who either have a job or are looking for one is surprisingly low for this stage of the recovery. If many of them start looking for work again, they will be counted as unemployed. So the unemployment rate could go up, even if the economy adds jobs.
Still, the economy faces potential pitfalls. Rising food and gas prices are giving consumers less money to spend on other goods and services, a factor that could slow economic growth in the coming months. And the battered housing market shows no sign of improving.
Michelle Meyer, an economist at Bank of America Merrill Lynch, said the nation’s gross domestic product — the broadest measure of the output of goods and services — will grow only 2.6 percent in 2011, a modest pace after such a deep recession. That’s likely to keep employment gains from accelerating beyond the 150,000 to 200,000 range for the rest of the year.
The Conference Board said Tuesday that its Consumer Confidence Index fell sharply to 63.4 in March, from 72 the previous month. A reading of 90 is consistent with a healthy economy.
Still, Thursday’s report on weekly unemployment benefit applications brought good news. The number of people seeking benefits fell 6,000 to a seasonally adjusted 388,000 for the week that ended March 26. That’s the second decline in three weeks.
Applications near 375,000 or below are consistent with a sustained increase in hiring. Applications peaked during the recession at 659,000.
The four-week average of applications, a less volatile measure, rose to 394,250. Still, that figure has dropped by 35,500, or 8 percent, in the past eight weeks.
Separately, more than half of the largest U.S. companies plan to step up hiring in the next six months, according to a survey by the Business Roundtable, released Wednesday. That’s the highest proportion of the group’s members that plan to add workers since the quarterly survey began in 2002. The Roundtable represents the CEOs of roughly 200 of the largest U.S. companies.
And the Conference Board said more job openings were posted online in March. The number of postings rose by 208,800, or nearly 5 percent, to 4.45 million. Job openings have increased by 600,000 in the first three months of this year.