Gain in Payrolls Shows Recovery More Entrenched

U.S. Economy: Gain in Payrolls Shows Recovery More Entrenched

 

By Timothy R. Homan

April 2 (Bloomberg) -- Employers in the U.S. created morejobs in March than at any time in the past three years, showingthe recovery from the worst recession since the 1930s isbroadening and becoming more entrenched.

Payrolls rose by 162,000 workers, the third gain in thepast five months and the most since March 2007, figures from theLabor Department showed today in Washington. The increaseincluded 48,000 temporary workers hired by the government toconduct the census. Unemployment was 9.7 percent for a thirdmonth.

The government revised the January and February job countup by a combined 62,000, putting the March gain at 224,000 afterincluding the updated data. The jobless rate was unchanged evenafter Americans who had previously dropped out of the workforcedecided to resume the job hunt, pointing to growing confidencethat the world’s largest economy will continue to expand.

“There’s a lot of good news in this report,” said ScottBrown, chief economist at Raymond James & Associates Inc. in St.Petersburg, Florida, whose payroll forecast was the closestamong the economists surveyed by Bloomberg News. “We’re clearlyon the recovery path. We expect to see this continue to build.We’re on our way.”

Caterpillar Inc. is among companies adding staff,indicating the economic recovery that began in the second halfof 2009 is starting to produce the jobs needed to lift consumerspending and sustain the expansion. Nonetheless, unemploymentmay be slow to recede as more people enter the job market,giving the Federal Reserve scope to hold its benchmark interestrate near zero in coming months.

Survey Results

Payrolls were forecast to increase by 184,000, according tothe median estimate of 83 economists surveyed by Bloomberg News.Estimates ranged from a decline of 40,000 to a gain of 360,000.

The jobless rate was projected to hold at 9.7 percent.Forecasts ranged from 9.5 percent to 9.9 percent.

Treasury securities dropped after the increase inemployment showed the expansion was becoming self-sustaining.The yield on the benchmark 10-year note climbed to 3.94 percentat 12:14 p.m. in New York, the highest since June. The stockmarket was closed in observance of Good Friday.

Treasury Secretary Timothy F. Geithner said the U.S.economy is showing signs of entering a period of sustainablegrowth as companies begin to hire.

‘Time to Heal’

“We have some more work to do, but I think the economy isdefinitely getting stronger,” Geithner, 48, said in aninterview today with Bloomberg Television in New York. “We’vemade a lot of progress, we’ve got some work to do still and it’sgoing to take some time to heal the damage.”

Part of the payroll gain last month likely reflected arebound from the February blizzards that set seasonal snowfallrecords in cities including Washington and Philadelphia,shuttering some businesses during the week of the governmentsurvey. Any hiring that would have taken place that week isfigured into the March job count instead.

Hiring at the Census Bureau for the population count mayhave the biggest impact on payroll figures in April throughJune, when the bulk of the additions will take place. Theprogram will then subtract from the job count the followingmonths as employees are dismissed after the work is done.

For that reason, economists will focus on the employmentfigures excluding the government. By that measure, job prospectsare brightening.

Private Hiring

Private payrolls increased by 123,000 in March, the thirdconsecutive increase and the biggest since May 2007. Employmentat government agencies climbed by 39,000 workers, reflecting theincrease in census staff. Budget-constrained state and localgovernments reduced headcount last month.

“The federal government didn’t hire nearly as many Censusworkers as thought,” Joel Naroff, president of Naroff EconomicAdvisors Inc. in Holland, Pennsylvania, said in an e-mail toclients. “It was the private sector that stepped up to theplate. The growth was broad-based as well.”

Manufacturers increased staff for a third month, adding toevidence factories are at the forefront of the recovery.Construction companies, which may have been most influenced bythe weather, boosted payrolls by 15,000 workers, the firstincrease since June 2007.

One company adding to payrolls is Leggett & Platt Inc., the127-year-old manufacturer. The Carthage, Missouri-based companyhas hired a few hundred employees this year to meet risingdemand for its car-seat parts and home-furniture components,according to Chief Executive Officer David Haffner.

‘Relatively Better’

“Things are better,” Haffner, 57, said in a March 16interview. “We are reluctant to get too optimistic too quickly,but things are relatively better.”

Employment of temporary workers, which are considered aharbinger of permanent hiring, climbed in March for a sixthconsecutive month. Their share in the payroll count isdiminishing, showing companies are becoming more optimistic,said Christopher Low, chief economist at FTN Financial in NewYork.

“The quality of jobs is improving, and it is a clear signof improving CEO confidence,” Low said in a note to clients.“Cautious CEOs hire temps, optimists make permanent hires.”

Not all the data in the employment report was positive. Thefigures showed average earnings per hour dropped last month andthe number of people working part-time because they couldn’tfind full-time work increased.

The so-called underemployment rate -- which includes thepart-timers and people who want work but have given up looking -- increased to 16.9 percent from 16.8 percent.

The report also showed an increased in long-term unemployedAmericans. The number of people unemployed for 27 weeks or morerose to a record 44.1 percent of all jobless.

To contact the reporter on this story:Timothy R. Homan in Washington at [e-mail]

Last Updated: April 2, 2010 12:18 EDT