U.S. job growth jumps
April 7, 2000: 12:28 p.m. ET
March employment up by 416,000; wages subdued, jobless rate steady
By Staff Writer M. Corey Goldman
NEW YORK (CNNfn) - The U.S. economy created more new jobs than expected in March as a host of one-time factors boosted new hires among businesses and government, the Labor Department reported Friday. At the same time, wages remained subdued and the jobless rate held steady.|
The economy added 416,000 new jobs in March, more than the 375,000 positions expected by analysts surveyed by Briefing.com, and well above the revised 7,000 positions created in February. Average hourly wages, a closely watched indicator of inflation, rose 5 cents to $13.60 an hour, a gain of 0.4 percent. The jobless rate remained unchanged from February at 4.1 percent.
A surfeit of one-time factors boosted the latest job growth tally. The addition of 117,000 census workers lifted the total, as did the extension of the reporting period by a week. Because March was five weeks long, an additional 50,000 to 100,000 positions were lopped on to the total, the Labor Department said. The return of 15,000 aerospace workers following Boeing Co. (BA: Research, Estimates)'s 40-day strike in February also factored in to the numbers.
Excluding all of the one-time factors, U.S. job growth advanced at a relatively moderate pace in the final two months of the first quarter, which may persuade Federal Reserve policy makers to slow their pace of inflation-fighting interest rate increases. The Fed repeatedly has cited the robust labor market as one its main concerns about the prospect of accelerating inflation. Analysts estimated that job creation totaled about 184,000, excluding all the special factors.
March's report "didn't meet the markets' worst fears, and on those grounds I view it as somewhat bullish," said Doug Porter, a senior economist with brokerage Nesbitt Burns Inc. At the same time, he added, "I don't really see any discernable sign that job growth is slowing. The underlying trend is still extremely robust job growth, which will lead the Fed to raise rates again."
Stocks rose in the wake of the numbers, as investors concluded that the pace of the U.S. economy, now in its record 109th month of uninterrupted expansion, is beginning to slow. Bonds posted small gains on expectations that inflation, which has yet to show signs of accelerating, remains subdued.
Wall Street economists and Fed officials, including Fed Chairman Alan Greenspan, have repeatedly expressed concern about the robust pace of U.S. job creation, which has led to a shrinking pool of workers available to produce the surging quantity of goods and services U.S. consumers demand.
Indeed, the so-called technology revolution has created a explosion of job creation that has forced employers across the country to outbid one another for workers, and prompted many companies to offer perks ranging from free gym memberships to sports cars to entice skilled labor.
U.S. Labor Secretary Alexis Herman told CNNfn that she was pleased with the pace of job creation last month, though still concerned about the lack of available training to help American workers acquire more skilled positions, something she thinks would narrow the gap between the 10.3 million Americans available to work and the host of skilled positions employers are clamoring to fill. (226KB WAV) (226KB AIFF)
That's why the Labor Department will be hosting a one-day National Skills Summit in Washington next Tuesday on how to improve training for workers. Fed Chairman Greenspan will be one of the keynote speakers.
To Main Street, help-wanted ads an inch thick and help-wanted signs in store windows across the country has fueled an unprecedented feeling of prosperity -- one that has spurred many consumers to spend even as their wages have remained relatively subdued. In fact, average hourly wages declined 0.1 percent from a year ago, according to Friday's report.
To Wall Street, however, unabated job growth has fueled concern that eventually employers will be forced to start paying their workers more, fueling faster inflation. To keep that from happening, the Fed has lifted short-term rates five times in the past eight months, making borrowing for consumers and businesses more expensive.
"If there is a danger, it is that the report isn't capturing creative and hidden ways employers are boosting wages," said Bill Cheney, chief economist with Boston-based John Hancock Financial Services. "I'm sure Greenspan has a sneaking suspicion that these kinds of things are happening and that they may at some point provoke a burst of wage inflation."
Have you filled out your census?
That aside, March's report fueled optimism among some market watchers that perhaps the Fed's spate of rate increases are already beginning to slow the economy, and the pace of job creation along with it -- something that could make the Fed think twice about lifting rates beyond their May 16 policy meeting. Most analysts expect the Fed to raise rates another quarter point next month.
"The Fed's work is beginning to have an effect," said Brian Wesbury, an economist with Griffin, Kubik Stephens and Thompson. "The economy is definitely beginning to exhibit signs of slowing. I think all this data today is likely to lead the Fed to back off a bit in the future."
Service-related employment grew by 328,000 in March, with almost half of that coming from the U.S. government. The government hired 142,000 new workers last month, most of them brought on temporarily to handle the 2000 census count. The Census Bureau added 117,000 workers.
The construction industry gained 89,000 jobs in March after a 17,000 drop a month earlier. Factories lost 5,000 jobs, led by makers of industrial machinery. The loss would have been larger had it not been for Boeing strike.
The labor pool, which measures the number of workers ready and able to fill existing positions, grew to 10.3 million in March from 10.2 million in February, based on new seasonally adjusted figures from the Labor Department. The portion of the U.S. population holding a job slipped to 64.7 percent in March from a record 64.8 percent in February.