Employers hire vigorously in April, but hurdles remain

McClatchy NewspapersMay 6, 2011 

WASHINGTON — A third consecutive month of strong private-sector hiring, reported by the government Friday, points to a firming trend for America’s fragile economy. Experts caution, however, that big hurdles remain along the road to recovery.

Employers added a respectable 244,000 jobs in April, the Labor Department said, but this was tempered by a climb of two-tenths of a percentage point in the unemployment rate, to 9 percent.

Economists had expected the jobless rate to tick up as more of the unemployed returned to seek jobs in an accelerating recovery. But the labor force was largely unchanged in April, suggesting that returning workers didn’t push up the jobless rate.

“It won’t be a straight line up for the job market, but it is clearly headed up as businesses are increasingly focused on expanding their operations, which means more jobs,” said Mark Zandi, the chief economist with forecaster Moody’s Analytics. “It will take longer for the unemployment rate to move definitively lower, given an expected pickup in labor-force growth, but by this time next year unemployment should be moving consistently lower.”

The April numbers would’ve been even stronger if not for the 24,000 government jobs lost during the month. Private-sector hiring for the month was pegged at 268,000.

Speaking at a factory in Indiana, President Barack Obama welcomed the positive jobs report and said that in a period slightly longer than a year, “We’ve added more than 2 million jobs in the private sector. Now, we’ve made this progress while our economy had been facing some serious head winds.”

April saw the best monthly private-sector hiring number since February 2006, and it bodes well for an economic recovery that's moved in fits and starts. April’s numbers followed a robust 216,000 jobs added in March, a number that was revised upward a bit Friday.

“The job market continues to gain traction, with the gains increasingly broad-based across industries and regions of the country,” Zandi said.

Retailers added 57,100 jobs, while white-collar jobs returned with professional and business services up by 51,000 positions. Leisure and hospitality, a category that's sensitive to economic trends, was up 46,000 jobs, while manufacturing added 29,000.

“This report is positive news for manufacturing, showing the recovery continues to move in the right direction with employment, with 250,000 net new jobs created since December 2009. However, we are not seeing as large of employment gains as we would hope to at this point in the recovery,” said Chad Moutray, the chief economist for the National Association of Manufacturers.

Even the hard-hit construction sector added 5,000 jobs in April. Government was the only significant loser during the month, with state and local governments shedding 22,000 of the 24,000 jobs lost.

Friday’s strong numbers followed a disappointing 1.8 percent annual economic growth rate from January through March. Soaring energy prices and Japan’s devastating earthquake and tsunami slowed U.S. and global growth and may hit hiring in the quarter that runs from April through June.

“I think we’re going to see some softer (hiring) numbers in May and June. I do think that the increase in commodity prices that we’ve seen this year have taken some toll on the consumer and to some extent on the willingness to hire,” said Nigel Gault, the chief U.S. economist for forecaster IHS Global Insight.

To that end, the number of workers who've been jobless for five weeks or less increased by 242,000 in April, the Bureau of Labor Statistics said, a number that matches the uptick in first-time jobless claims in recent weeks.

The big question ahead is what happens to the prices of oil and gasoline. The nationwide average for a gallon of regular unleaded gasoline stood at $3.98 on Friday, a day after world oil prices tumbled $10 a barrel in trading on the New York Mercantile Exchange.

A year ago Friday, a gallon of gasoline sold for $2.92. The volatility in recent months leaves consumers and employers uncertain about energy prices later this year.

“I think what’s crucial is that they stabilize somewhere around where they are now. If we stay in that sort of region, we should be OK. … We will be living with higher gasoline prices but we won’t be seeing those prices moving higher,” said Gault, who thinks that oil in the $130-per-barrel range spells a sharp economic slowdown. In trading Friday in New York, oil closed at around $97 a barrel.

Stocks also rose. The Dow Jones Industrial Average gained 54 points to close at 12638, partially reversing a four-day decline.

Economists don’t give too much weight to employment statistics for any single month but look at the trend over longer intervals. And those trends clearly are looking better.

“Over the last three months, payroll employment has risen by an average of 233,000, compared with an average of 104,000 in the prior three months,” BLS Commissioner Keith Hall said in a statement that accompanied the jobs report.

Since February 2010, the economy has added more than 1.8 million jobs, a strong number in normal times but nowhere close to what’s needed to claw back from the deepest downturn since the Great Depression.

“Despite head winds from high energy prices and disruptions from the disaster in Japan, the last three months of private job gains have been the strongest in five years,” Austan Goolsbee, the head of the White House Council of Economic Advisers, said in a statement.

The BLS report had other positive signs. The number of long-term unemployed, defined as being jobless for at least half a year, fell by 283,000 and their share of the unemployed fell to 43.4 percent. That’s still a terrible number, reflecting 5.8 million workers who've been jobless for at least 27 straight months, but it's improving.

Friday’s report also revised the February and March employment estimates upward. Statisticians now say the economy added 46,000 more jobs over those two months than first thought.

Still, Heidi Shierholz, a labor economist with the liberal Economic Policy Institute, offered a sober reminder of the hurdles ahead.

While “while net jobs growth of 244,000 is relatively good news, this country has nearly 14 million unemployed, and millions more who have given up even trying to find work,” she said in an analysis. “At April’s job growth rate, it would take until the fall of 2016 to get back to the pre-recession unemployment rate.”

APRIL BY THE NUMBERS:

_ Retail, up 57,100.

_ Professional and business services, up 51,000.

_ Leisure and hospitality, up 46,000.

_ Health care, up 37,300.

_ Manufacturing, up 29,000.

_ Construction, up 5,000.

_ Transportation and warehousing, up 4,100.

_ Financial services, up 4,000.

_ Temporary help services, down 2,300.

_ Government jobs, down 24,000.

ON THE WEB

BLS report

Employment by sector

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