Your Economy (No Politics)

[Bullwinkle]

Payrolls grow but jobless rate up
By Glenn Somerville
2 hours, 2 minutes ago


WASHINGTON (Reuters) - Employers added a stronger-than-forecast 243,000 jobs in February but the unemployment rate edged up, the Labor Department said on Friday in a report that also hinted at simmering wage pressures.

Employers have increased payrolls every month for the past 2-1/2 years, a sign the economy is vigorous enough to keep Federal Reserve policy-makers on edge about the pace of wage and price rises.

The February job gain followed a revised 170,000 new jobs in January, originally reported as 193,000.

"This report tells the Fed to watch out," said economist Joel Naroff of Naroff Economic Advisors Inc. in Holland, Pa., since rising wages are associated with reduced productivity, or hourly output per worker, which helps mute inflation.

"Couple that with accelerating wage increases and you have building employment cost pressures," Naroff said, adding that it almost certainly means another interest-rate rise when Fed policy-makers meet March 27-28.

Average hourly earnings grew 0.3 percent during February, in line with expectations, but in the 12 months through February pay rose by 3.5 percent, which department officials said was the highest annual increase since September 2001.

The unemployment rate rose to 4.8 percent from 4.7 percent in January. The jobless rate and payroll figures are compiled from two separate surveys and so can diverge from one another.

The U.S. central bank so far has pushed interest rates up 14 times in quarter percentage point increments since mid-2004, bringing the its bellwether federal funds rate to 4.5 percent.

Stock prices gained significantly on the implication of continued economic strength and the dollar rose sharply against other major currencies. But bond prices weakened on concern that it guaranteed one or more rate hikes ahead.

Separately, the Commerce Department said January wholesale inventories rose 0.1 percent, less than expected, but that was because strong sales of new cars kept stocks low. That may mean more room in coming months to keep factories busy.

JOBS, JOBS, JOBS

U.S. Treasury Secretary John Snow, in an appearance on Bloomberg Television, said he expected brisk job growth throughout 2006 and continued gains in real wages.

"We've been averaging over 200 (thousand jobs a month) since the hurricanes and I think we're going to continue to see job growth in that range going forward," Snow said. Hurricanes Katrina and Rita that struck the Gulf Coast late last summer and early fall slowed job growth in September and October but it subsequently picked up.

Economist Richard DeKaser of National City Corp. in Cleveland said the labor market "continues to grow but not at an explosive pace" and said that might temper Fed concerns about wage pressures.

"We do see a bump-up in hourly earnings. We have established a clear two-year upward trend," DeKaser said, but added that a dip in the average workweek to 33.7 hours last month from 33.8 hours in January partly offset higher wages.

There were more jobs in nearly every category of hiring during February.

The report showed another 41,000 construction jobs were added, on top of 55,000 in January. That was contrary to expectations that construction would ease more with a return to colder weather after an exceptionally mild January.

Only manufacturing shed employees, down 1,000 in February after adding 7,000 in January.

Overall, there were 45,000 new jobs in goods-producing industries during February and a whopping 198,000 more in service businesses -- the two main sectors of the economy.

http://news.yahoo.com/s/nm/20060310/bs_nm/economy_dc_6