US factories help job recovery endure in March

A job recruiter from Ten­cent Amer­ica of Palo Alto, Calif., talks to atten­dees at the Game Devel­op­ers Con­fer­ence in San Fran­cisco. Fewer peo­ple sought unem­ploy­ment ben­e­fits last week, adding to signs that the job mar­ket is strength­en­ing. (AP Photo/Paul Sakuma)

CHRISTOPHER S. RUGABER

AP Eco­nom­ics Writer

WASHINGTON — A resur­gent U.S. job mar­ket that has lifted the econ­omy appears to be enduring.

Fac­to­ries in the North­east kept hir­ing in early March. And the num­ber of peo­ple apply­ing for unem­ploy­ment aid fell back to a four-year low. The econ­omy is adding jobs at a time when infla­tion remains rel­a­tively mild out­side of higher gas prices.

The upbeat gov­ern­ment reports Thurs­day rein­forced the mes­sage sent by last week’s encour­ag­ing job fig­ures for February.

Good eco­nomic news drove stocks higher, too. The Stan­dard & Poor’s 500 index closed above 1,400 for the first time since June 2008. The Dow Jones indus­trial aver­age fin­ished up for the sev­enth straight ses­sion at 13,252.76 — the high­est close since the last day of 2007.

“More solid U.S. eco­nomic data point­ing to a grad­u­ally improv­ing labor mar­ket, a bounce-back in man­u­fac­tur­ing and no mate­r­ial … infla­tion pres­sure,” Robert Kav­cic, an econ­o­mist at BMO Cap­i­tal Markets.

Appli­ca­tions for unem­ploy­ment aid dropped to a sea­son­ally adjusted 351,000, the Labor Depart­ment said Thurs­day. That matched a four-year low reached last month. The four-week aver­age, which smooths fluc­tu­a­tions, was unchanged at 355,750, also a four-year low.

Appli­ca­tions have declined 14 per­cent since Octo­ber. When appli­ca­tions drop con­sis­tently below 375,000, it usu­ally sig­nals that hir­ing is strong enough to lower the unem­ploy­ment rate.

The steady decline has coin­cided with the best three months of hir­ing in two years. From Decem­ber through Feb­ru­ary, employ­ers added an aver­age of 245,000 jobs a month. The unem­ploy­ment rate has fallen to 8.3 per­cent, the low­est in three years.

The fig­ures “indi­cate that the labor mar­ket is steadily, if slowly, improv­ing,” said Steven Wood, an econ­o­mist at Insight Eco­nom­ics. “Another month of 200,000-plus pay­roll employ­ment in March is likely.”

U.S. fac­to­ries in the North­east are likely to con­tribute to those March pay­roll gains, based on two sur­veys con­ducted by the Fed­eral Reserve Bank of Philadel­phia and the Fed­eral Reserve Bank of New York.

The Fed banks said man­u­fac­tur­ing in both regions is grow­ing at a healthy pace in March. The Philadel­phia Fed man­u­fac­tur­ing index posted its high­est read­ing since April 2011; the New York Fed index hit a 21-month high.

The two sur­veys also showed that fac­to­ries in those areas are hir­ing more workers.

Fac­to­ries have played a lead­ing role reviv­ing job growth. The Labor Depart­ment reported last week that man­u­fac­tur­ing jobs grew by 31,000 in Feb­ru­ary. Over the past year, man­u­fac­tur­ing added 227,000 net jobs.

Ris­ing auto sales and increas­ing demand for heavy equip­ment, such as min­ing and agri­cul­tural machin­ery, have kept fac­to­ries busy.

Still, there were some cau­tion­ary signs in the Fed sur­veys. Both showed that new orders and ship­ments slowed, indi­cat­ing that out­put may decel­er­ate in com­ing months.

Higher gas prices could also force con­sumers to cut back on dis­cre­tionary spend­ing. That could weigh on growth and slow hiring.

On Thurs­day, the aver­age price nation­ally for a gal­lon of gas rose to $3.82, accord­ing to AAA. That’s 51 cents higher than a month ago.

Ris­ing gas costs drove U.S. whole­sale prices up last month, accord­ing to a sep­a­rate Labor Depart­ment report. But exclud­ing the big jump in gas, infla­tion was mostly tame.

In the past twelve months, whole­sale prices have increased 3.3 per­cent. That’s the small­est year-over-year gain since August 2010.

The report “sug­gests that infla­tion­ary pres­sures are still con­tained,” Paul Ash­worth, an econ­o­mist at Cap­i­tal Eco­nom­ics, said in a note to clients. “More evi­dence that the U.S. econ­omy could finally be on the right track.”

The Fed­eral Reserve said this week that it expects oil and gas prices to tem­porar­ily boost infla­tion. But it pre­dicted longer-term infla­tion should remain stable.

Fed pol­i­cy­mak­ers sketched a slightly more upbeat view about the recov­ery after their one-day meet­ing, largely because of the surge in hir­ing. They said unem­ploy­ment should con­tinue to decline grad­u­ally as the econ­omy expands. And they noted that con­sumer spend­ing and busi­ness invest­ment have picked up.

The cen­tral bank took no fur­ther steps to aid the recov­ery and repeated its plan to keep short-term inter­est rates near zero through 2014.

The job mar­ket has a long way to go to fully recover from the Great Reces­sion. More than 12.8 mil­lion peo­ple remain unem­ployed. And the econ­omy still has 5 mil­lion fewer jobs than before the downturn.

But the more robust job mar­ket has caused many so-called “dis­cour­aged work­ers” who had stopped look­ing for jobs to start look­ing again. The work force surged by 476,000 in Feb­ru­ary and by nearly 750,000 in the past two months.

Posted by AP News on Mar 15 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.