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US employment rises for first time in seven months ( 2003-10-04 14:32) (Agencies)
The US job market in September showed its strongest signs of revival since the start of the year, as a government report suggested that the economic recovery might finally be powerful enough to help workers. Employment rose by 57,000 last month, the first increase since January, and the unemployment rate held steady at 6.1 percent, the Labor Department reported yesterday. But the increase in jobs was still not large enough to match the growth of the population, and the percentage of adults with jobs fell to the lowest level in 10 years. "The labor market showed a little bit of life," said Drew T. Matus, an economist at Lehman Brothers. "However, one month does not erase all of the pain we have seen." The jobs increase gave the White House a welcome piece of good news, after a difficult few weeks filled with questions about its handling of the economy and the war in Iraq. Democrats candidates pointed anew to the large job losses over the last two and a half years. The economy has been growing since late 2001 but slowly enough that companies have been able to increase production without adding employees. Last month, the employment gains, though small, swept across much of the economy. Retailers added more jobs than they had since March 2002, and temporary-help agencies ?one of the first sectors to cut workers when the economy weakened in 2000 ?added to their payrolls for the fifth consecutive month. Manufacturers cut another 29,000 jobs, but the loss was the smallest since the summer of 2002. Adding to the sense of momentum, the Labor Department also announced that the economy had lost only 98,000 jobs in July and August, 44,000 fewer than initially estimated. But job losses last year and early this year were larger than first reported, it said yesterday. Stocks rose after the report's release and held most of their gains. The Standard & Poor 500-stock index closed just below 1,030, up 10 points, or almost 1 percent. Bond prices fell, meanwhile, in another indication of investors' growing optimism about the economy. "This changes the mood of the market," said Ian C. Shepherdson, the chief domestic economist at High Frequency Economics in Valhalla, N.Y. For all of the hints of a turnaround, however, the report also showed how the length and depth of the jobs slump continued to weigh on workers. With the economy having shed 2.8 million jobs since the start of 2001, employees have continued to lose bargaining power and unemployed people are struggling to find new work. Average weekly earnings for rank-and-file workers ?who make up about four-fifths of the work force ?fell last month for the first time since April, by 33 cents, to $520.67. The number of people who have been out of work for at least 27 weeks and continue to look for a job jumped to 2.1 million, from 1.9 million in August. Almost five million people were working part time because they could not find full-time work, up from 4.4 million. Demonstrating the job market's continuing troubles, the Ford Motor Company said on Tuesday that it would lay off 1,700 workers and eliminate 1,300 vacant positions. On Wednesday, Verizon Communications offered voluntary buyouts to all 74,000 of its managers in hopes of trimming its payroll, too. The weak economy has also helped cause a rise in both the number of people without health insurance and the number living in poverty, according to the Census Bureau. Polls have shown that Americans are growing increasingly concerned about the economy and about Mr. Bush's policies, even if their pessimism has not reached the levels it did in the aftermath of other recent recessions. Fifty-six percent of people disapprove of the president's handling of the economy, up from 33 percent at the start of last year, according to a New York Times/CBS News Poll conducted this week. "The conditions of the labor market are still not as strong as we'd like them to be, but this news is very positive," said N. Gregory Mankiw, chairman of Mr. Bush's Council of Economic Advisers, referring to the jobs gain. "The signs here are good." Democrats responded that the current jobs slump was the longest since the 1930's and that Mr. Bush had done little to help the economy beside cutting taxes for the wealthy. "I don't blame the president for all of what's happened," Senator John Kerry, Democrat of Massachusetts and a presidential candidate, said in a telephone interview. "There are certain cyclical components. The problem is that the president hasn't done the things the president can do." Mr. Kerry added that the budget deficit had risen more than necessary during the economic slump and that the administration should have a tougher trade policy to prevent jobs from moving overseas. Economists do credit the recent tax cut, along with the boom in mortgage refinancings, with lifting consumer spending and persuading some businesses to begin hiring again. Car dealers, department stores, airlines and broadcasters all added workers last month, after having cut positions over the summer, according to the Labor Department's numbers, which are adjusted to account for season variations. Across the vast service sector, the net hiring of 74,000 workers last month more than offset declines in the payrolls of government agencies, many of which are cutting their budgets, and manufacturers. Companies have also begun making moderate increases in their investments in new factories, equipment and technology, after more than two years of sharp cuts. In September, for example, makers of computers and other electronic equipment eliminated 3,800 jobs, their 32nd consecutive monthly cut. The reduction was the smallest since the streak began, however. Most forecasters expect the economic recovery to continue gaining strength and the unemployment rate to fall next year. At 6.1 percent last month, the jobless rate was below the high of 6.4 percent it hit in June but well above the 30-year low of 3.9 percent in late 2000. After the jobs report, "we can now believe in a more sustainable recovery," Mr. Shepherdson said. "Another increase next month would really solidify the change." But forecasters ?on Wall Street, at the Federal Reserve and in the Bush administration ?have been surprised time and again over the last two years by the duration of the job slump. Employment also began to rise late in 2002, more strongly than it did last month, only to turn down again early this year. Some economists blamed the uncertainty created by the war in Iraq; others said the late-90's bubble in stock prices and technology spending was proving to have long-lasting effects. For the coming months, some analysts remain worried that the post-bubble hangover could re-emerge after the effect of recent tax cuts begins to wear off. With only moderate job growth in September, the number of people outside of the labor force ?those neither working nor looking for a job ?increased to 75.2 million, from 75 million in August. The percentage of adults not in the labor force has risen more sharply over the last three years than at any point since the early 1960's. The portion of people older than 16 who were working last month fell to 62 percent, down from a record high of 64.8 percent in 2000. Employment must grow by roughly 150,000 to 200,000 jobs each month to keep pace with the population. Earlier this week, the Labor Department reported that while the number of layoffs had fallen during 2002, hiring had remained too slow to keep employment growing. For 2003, it has released numbers only on net changes in employment ?like September's gain of 57,000 jobs ?not on the job creation and destruction that combine to produce the net change.
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