March 22, 2011 > Strong economic data points to more hiring
Strong economic data points to more hiring
Submitted By AP Wire Service
WASHINGTON (AP), Mar 17 - U.S. factories are producing more cars, computers and household appliances, and applications for unemployment benefits over the past four weeks are at the lowest point since summer 2008.
Economic data released Thursday suggest that March will be the second straight month of strong job growth. And the reports helped Wall Street rebound a day after the market suffered its biggest drop in seven months.
Still, rising prices for household necessities and trouble overseas could slow the U.S. economy in the coming months.
``We have a lot of momentum in the U.S. economy right now,'' said Kurt Karl, chief economist at Swiss Re. ``That's good, particularly since we're going to be challenged by higher oil prices'' and the impact of Japan's earthquake and nuclear crisis.
A key reason for the brighter outlook is that factory production increased in February for the sixth straight month, the Federal Reserve said. Manufacturing output has grown in all but four months since the recession ended in June 2009. And manufacturers have created 190,000 jobs over the past year, the highest 12-month total for that group since 1998. Last month alone factories added 33,000 net new jobs.
Rising factory output supports ``more high-paying jobs, and more high-paying overtime,'' said Brian Bethune, chief U.S. financial economist at IHS Global Insight.
Fewer Americans are seeking unemployment benefits. Applications fell last week for the third time in four weeks, the Labor Department said. The four-week average has dropped to a 386,250 - the lowest level since July 2008. That's near the 375,000 level that, if sustained, tends to signal declines in the unemployment rate.
The Conference Board also cited an improving employment picture Thursday while noting that its index of leading economic indicators rose for the eighth straight month in February. But the group warned that a spike in food and energy costs could slow economic growth.
Inflation in those two areas drove consumer prices up in February by the biggest amount since June 2009, the Labor Department said in a separate report. While many economists say gas prices are peaking, some expect food will get even more expensive this fall. That's when consumers will feel the full impact of higher wholesale food prices, which surged last month by the largest amount in 36 years.
As Americans spend more on groceries and to fill their gas tanks, they have less money to spend on discretionary goods. That means consumer spending, which accounts for 70 percent of economic activity, could fall.
Still, inflation for most other goods is relatively tame and most economists were encouraged by Thursday's data.
The reports mostly reinforced the view among some economists that employers will add a net 200,000 jobs this month. That would be the second straight month of private payroll gains above 200,000, the first time that's happened since the recession began in December 2007.
Private companies added 222,000 jobs in February, the most in almost a year, and unemployment fell to 8.9 percent. The unemployment rate has fallen by nearly a full percentage point since December - the steepest three-month decline since 1983.
Investors seemed to be pleased by the data. The Dow Jones industrial average rose by more than 109 points in afternoon trading.
The Federal Reserve acknowledged the threat of more expensive food and energy earlier this week. But the central bank said the pressures are likely to be temporary.
Most economists don't expect the central bank to take any steps to combat inflation, such as raising short-term interest rates, until next year. Prices would have to rise much faster to prompt an earlier move by the Fed.
Overall, the Fed this week offered its most optimistic assessment of the economy since the recession ended, largely because of stronger job growth.
``The downward trend in initial jobless claims is undeniable,'' said Joshua Shapiro, chief U.S. economist for MFR Inc. The decline is ``strong evidence that the labor market recovery is for real,'' he added.