- U.S. employers added 21,000 workers in February, fewer
than the lowest forecast of economists and a further sign of a "jobless
recovery" that may hurt President George W. Bush's reelection prospects.
-
- The gain was just a sixth of the median Bloomberg News
survey forecast for 130,000 new jobs. Today's figure followed a January
gain of 97,000, less than previously estimated, the Labor Department said
in Washington. The unemployment rate held at 5.6 percent as more Americans
gave up their search for a job.
-
- Consumer confidence and Bush's popularity have sagged
as tax cuts and the lowest Federal Reserve benchmark interest rate in 45
years failed to ignite hiring amid the fastest economic expansion in two
decades. Democratic Senator John F. Kerry, who will challenge Bush in November,
said the president hasn't done enough to create jobs after losing 2.3 million
during his tenure.
-
- "It's certainly going to be an issue in the election,"
said Alice Rivlin, a former vice chairman of the Federal Reserve and adviser
to President Bill Clinton, in an interview. "If we don't get any serious
jobs growth soon, it could become worrisome for the economy."
-
- Gains in productivity, or output for each hour worked,
have limited hiring by enabling companies to meet demand with fewer employees.
The dollar fell and U.S. 10-year Treasury notes had their biggest gain
since October 2001 as investors bet the Fed can hold off in raising its
target interest rate.
-
- 'Rip the Heart Out'
-
- Bush, who took office at the end of January 2001, may
be the first president since Herbert Hoover to suffer a net loss of jobs
during a term. Manufacturers cut 3,000 jobs last month, the 43rd straight
decline. About 1.7 million factory jobs have been lost since the recession
ended in November 2001, part of the reason economists have referred to
the period as a "jobless recovery." That's become a campaign
issue in manufacturing-intensive states like Ohio and Michigan.
-
- Those job losses "rip the heart out of our economy,"
Kerry said in a statements. "At this rate, the Bush administration
won't create its first job for more than 10 years."
-
- Treasury Secretary John Snow said in October he would
"stake my reputation" on faster job growth before Christmas.
Today he said that while February's numbers "aren't satisfactory,"
the economy "has turned the corner on growth and I'm confident we'll
see strong job numbers in the months ahead."
-
- The situation is "very astonishing," said Lyle
E. Gramley, a former Fed governor and now a senior economic adviser with
Schwab Soundview Capital Markets. "Here it is, two-and-a-quarter years
into the recovery, and we're still having trouble creating jobs. My confidence
about when the job pickup is likely to begin is waning."
-
- Cautious Executives
-
- Earlier this week, the Business Roundtable, a 150-member
association of chief executives, said an expected strong increase in sales
at their businesses won't lead to a significant pickup in hiring this year.
-
- Goodrich Corp., the world's biggest maker of aircraft-landing
gear, doesn't see "any real significant hiring" because the company
can meet rising sales with fewer workers, Chief Executive Officer Marshall
Larsen told investors Tuesday.
-
- The 4 percent note maturing in February 2014 rose 1 11/32,
pushing down its yield 17 basis points to 3.85 percent, at 5 p.m. in New
York. A basis point is 0.01 percentage point. The dollar weakened to $1.2366
per euro in New York from $1.2203 late yesterday, for its biggest drop
since Jan. 20.
-
- Fed Futures
-
- Trading in interest rate futures indicated investors
now don't expect the Federal Reserve to raise the benchmark overnight bank
lending rate from 1 percent, the lowest since 1958, until December at the
earliest.
-
- "The message to the Fed in this unambivalently ugly
report is clear enough -- there is no way to justify rate hikes in such
a weak jobs climate," said Christopher Low, chief economist at FTN
Financial in New York.
-
- Concerns about job losses have eroded the confidence
of consumers, whose spending makes up 70 percent of the economy. The New
York-based Conference Board's consumer confidence index for February fell
to 87.3 from a revised 96.4 in January, the biggest decline since February
2003, a month before the start of fighting in Iraq.
-
- "Until the job market improves, spending is at risk,"
said Kathleen Bostjancic, a senior economist at Merrill Lynch & Co.,
in a note to clients.
-
- So far consumers are keeping pace. The Federal reserve
said today that U.S. consumers added $14.3 billion to their non- mortgage
debt load in January, the biggest increase in eight months, taking advantage
of decades-low interest rates to finance purchases of cars, other goods
and services. Non-revolving credit such as loans for automobiles, mobile
homes and college tuition accounted for most of the 8.6 percent gain in
consumer borrowing, measured at an annual rate.
-
- Service Jobs
-
- Employment in service-producing industries, which include
retailers, banks and government agencies, gained 46,000 after an increase
of 77,000 in January. Government payrolls rose by 21,000.
-
- The report showed productivity gains are holding down
hiring in service industries as well. Retailers added just 13,000 workers,
even as Wal-Mart Stores Inc., Target Corp., and other chains said February
sales at stores open at least a year rose more than expected.
-
- The unemployment rate was forecast to hold at 5.6 percent,
based on the Bloomberg survey for the Labor Department report. The labor
participation rate, which measures the number of people employed or looking
for jobs, fell to 65.9 percent from 66.1 percent, as 588,000 people left
the work force. February's participation rate was the lowest since September
1988.
-
- Fed and Productivity
-
- Gross domestic product may expand 4.6 percent this year,
the most since 7.2 percent in 1984, according to the median forecast in
the latest Bloomberg monthly survey. Still, the Federal Reserve's latest
"beige book" survey of regional economic conditions, released
Wednesday, found employment "has been growing slowly."
-
- Fed officials including Chairman Alan Greenspan have
said job growth will be limited until productivity rates decline. For all
of last year, productivity rose 4.4 percent following a 5 percent gain
in 2002, the Labor Department said yesterday. That marks the first back-to-back
years exceeding 4 percent since record-keeping began in 1947.
-
- Construction jobs fell by 24,000. Bad weather in February
"was very significant" in holding down job growth, said Ian Shepherdson,
chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New
York.
-
- Temporary Help
-
- Temporary help, one potential indicator of future hiring
demand, rose by 32,000 after a decline in January.
-
- "We are seeing demand for staffing services increasing
across the job spectrum, and the recovery continues to broaden from temporary
staffing into permanent jobs." said Carl Camden, president of Troy,
Michigan-based Kelly Services Inc., the second- largest temporary employment
agency.
-
- The manufacturing workweek rose by six minutes to 41
hours and overtime held at 4.5 hours. Average weekly hours worked for all
employees held at 33.8 hours in February, while workers' average hourly
earnings rose by 3 cents to $15.52.
-
- The results are far short of what would be needed to
raise this year's average nonfarm payroll by 2.6 million to the 132.7 million
level predicted by the White House last month. Bush and his advisers have
declined to reiterate that target, which they said was compiled based on
data as of Dec. 2, since the report was released last month.
-
- Fewer U.S. small business owners boosted payrolls in
February and plans to expand hiring in coming months declined, according
to a private survey released today. Some 46 percent of small businesses
were trying to hire more workers last month, down from 49 percent in January,
according to survey by the National Federation of Independent Business.
-
- "They're getting nervous in the White House,"
said Diane Swonk, director of economics at Bank One Corp. in Chicago. Unless
hiring picks up, "it's going to be an uphill battle for Bush. It's
first, last, and always the economy for voters."
-
- To contact the reporter on this story: Joe Richter in
Washington, or jrichter1@bloomberg.net To contact the editor on this story:
Kevin Miller at kmiller@bloomberg.net
-
- ©2004 Bloomberg L.P. All rights reserved.
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