NYTimes: Jobs surged in April, Income Rose

ahhhh, those bush apologistas at the times just can't help themselves. GM gets it's bonds demoted to junk status and they have the temerity to tell us the economy is improving. what's next, will they suggest freedoms on the march?

http://www.nytimes.com/2005/05/07/business/07econ.html?

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Creation of Jobs Surged in April, and Income Rose

By LOUIS UCHITELLE
Overriding earlier evidence that suggested the economy was slowing significantly, job creation and income growth appear to be holding up their end of the recovery.

The government reported yesterday that the nation's employers generated an unexpectedly large number of jobs in April - 274,000 - even as they gave their existing employees additional hours of work.

The employment report was the most positive news about the economy in weeks. It dented the gloom that had accumulated after a number of recent measures provided evidence that last year's robust growth might be fading.

"The main thing I think these employment numbers tell you is that all this worry about the economy experiencing a significant soft patch has been exaggerated," said Richard D. Rippe, chief economist at the Prudential Equity Group.

Employment rose across all sectors except manufacturing. The Bureau of Labor Statistics also revised its estimates for February and March, adding 93,000 jobs - enough to erase the impression that job growth had faltered, particularly in March.

The unemployment rate last month was 5.2 percent, unchanged from March but well below the 6.3 percent rate of nearly two years ago.

The Bush administration greeted the April jobs report as a sign of better times ahead. Treasury Secretary John W. Snow said in a statement that the surge in job creation showed that "President Bush's jobs and growth agenda has again produced results for Americans."

For the broad group of workers below management ranks, hourly wages were up 5 cents, to $16 an hour, and up 2.7 percent over the last year. That was not enough to keep up with a 3.1 percent annual inflation rate, but the average number of hours worked in a week rose for the first time this year, and the increase in pay that resulted brought average weekly pay to $542, a rise of 3.3 percent in the last 12 months.

"Unless the April numbers are a blip," said Jared Bernstein, an economist at the liberal Economic Policy Institute, "they tell you that employers are feeling more optimistic about where the economy is headed than some of us who have been looking at the economy from 30,000 feet up."

Still, for all the good news, even optimistic forecasters were reluctant to declare that the recovery, which entered its soft patch in the first quarter, was firmly back on track.

"We still have the spike in oil prices to contend with," said Ian Shepherdson, chief domestic economist for High Frequency Economics. "It is entirely possible that by June many employers will say: 'Oh, my God. We hired all these people and the demand is not there to support them.' That is not my view, but it is certainly possible."

Whatever the uncertainties, the new jobs report killed incipient speculation that the Federal Reserve's policy makers would ease up on their regular quarter-point interest rate increases, perhaps letting the June meeting pass without one. Reflecting this sentiment, yields rose yesterday for the benchmark 10-year Treasury bond, which influences mortgage and car loan rates. Stock prices finished the day almost unchanged.

A slowdown in the growth of labor productivity contributed to the surge in hiring, economists said, as employers moved to keep up with demand for their goods and services by adding workers and hours. Partly as a result, the pace of job creation has accelerated recently; it has averaged 240,000 a month since February and 181,000 over the last year. These averages are rising quickly enough to generate jobs for those entering the labor force and seeking work.

For all the surge in hiring, however, there was evidence in the April report that the number of people hunting for jobs was greater than the demand for their services. The average time that the unemployed spent in their search ticked up to 19.6 weeks from 19.5 in March.

"You would like to see even faster job growth," Mr. Bernstein said, "so that the labor market would tighten up more quickly."

That is not likely to happen, says James Glassman, an economist at J. P. Morgan Chase, because the great majority of the unemployed are people under the age of 45. They dropped out of the labor force when job rolls were shrinking in the early years of the recovery, Mr. Glassman said, and now are returning.

"They have to come back because they are young and must work," he said, "but we have a couple of years ahead of us of strong hiring before we are likely to be back at full employment and tight labor markets."

Like most of the nation's forecasters, Mr. Glassman was reluctant to raise his estimate of economic growth in response to the new evidence of strength in the labor market. Uncertainty about oil prices feeds that reluctance and explains his firm's recent decision to lower its forecast for economic growth to 3 percent in 2005 from 4 percent. That shift roughly parallels the actual drop in economic growth since last year's fourth quarter.

"If you are optimistic about the second half of the year, you have to assume that oil prices will ease off," Mr. Glassman said. "It seems like that should happen because inventories are quite substantial, which means that suppliers are getting enough oil into the marketplace. But what should happen might not happen."

Job creation last month was particularly strong among construction companies, which added 47,000 workers; at restaurants, bars and coffee shops, which increased their payrolls by 35,000; in health care, up 25,000; at telephone companies, which added 9,000 employees; and in movie and television production, up 7,000.

Manufacturing, where employment has fallen almost every month for seven years, was down another 6,000 workers in April.

The employment report was not the only news this week suggesting that the recent dip in the economy may be temporary. While Ford and General Motors continued to lose ground to their competitors, overall auto sales rose in April despite high gasoline prices.

"Oil prices are up, and that is the biggest short-term risk," Mr. Rippe, the Prudential economist, said. "But job growth is brisk and that will feed into consumer spending."