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News : International Last Updated: Apr 6, 2010 - 6:06:46 AM


US employment increased by 162,000 in March; 44.1% of unemployed were jobless for more than six months - - the highest level since at least 1948
By Finfacts Team
Apr 3, 2010 - 7:33:45 AM

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Nonfarm US payroll employment increased by 162,000 in March, and the unemployment rate held at 9.7 per cent, the US Bureau of Labor Statistics reported Friday. The number of long-term unemployed - - who were jobless for more than six months or 27 weeks or more - - increased by 414,000 over the month to 6.5 million and accounted for 44.1 per cent of unemployed persons - -  the highest level since at least 1948.

Temporary help services and health care continued to add jobs over the month. Employment in federal government also rose, reflecting the hiring of temporary workers for Census 2010. Employment continued to decline in financial activities and in information.

There is a need for persistently strong economic and job growth over the next few years to regain the 8.5 million payroll jobs lost since December 2007, not to mention the 10.6 million jobs required to restore the employment rate (employment-population ratio) prevailing before the start of the Great Recession, according to Richard Berner, chief economist of US investment bank Morgan Stanley. Jobs growth in the United States in the past three decades has been largely driven by growing payrolls in the services and government sectors.

For example, the number of jobs in the professional and business services category, rose by about 250 per cent between 1980 and a peak of 18 million in January 2008 while public payrolls increased from 16.2 million in 1980 to 22.6 million at the early 2009 peak, most of the growth being in state and local area. During that time, manufacturing jobs fell from 19.3 million to 11.5 million and total US employment grew from 90 million in 1980 to 131 million in 2009.

Morgan Stanley expects annual job growth to average 1 per cent (110,000 monthly) over 2010-11, excluding hires for the decennial census.  Even those modest gains are not a foregone conclusion. Job losses have abated, and some labour-market indicators have improved, but employment has just turned up after a blip last November. 

In March, the number of unemployed persons was little changed at 15.0 million, and the unemployment rate remained at 9.7 per cent.

Parsing the jobs numbers, with CNBC's Hampton Pearson; David Malpass, Encima Global president; Mark Zandi, Moody's Economy.com chief economist; Andy Serwer, Fortune managing editor; Robert Barbera ITG chief economist; and CNBC's Carl Quintanilla, Steve Liesman, Rick Santelli & Becky Quick:

The broad measure of unemployment increased to 16.9 per cent from 16.8 per cent in February. This rate includes persons marginally attached to the labour force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time job.

Temporary help services added 40,000 jobs in March. Since September 2009, temporary help services employment has risen by 313,000; Employment in health care continued to increase in March (27,000), with the largest gains occurring in ambulatory health care services (16,000) and in nursing and residential care facilities (9,000); In March, employment in mining increased by 8,000. Monthly job gains in mining have averaged 6,000 over the past 5 months.

Employment in federal government was up over the month, reflecting the hiring of 48,000 temporary workers for the decennial census; Manufacturing employment continued to trend up in March (17,000); the industry has added 45,000 jobs in the first 3 months of 2010. Over the month, job gains were concentrated in fabricated metal products (9,000) and in machinery (6,000).

Employment in construction held steady (15,000) in March. The industry had lost an average of 72,000 jobs per month in the prior 12 months; In March, financial activities shed 21,000 jobs, with the largest losses occurring in insurance carriers and related activities (-9,000). Employment in the information industry decreased by 12,000.

The average workweek for all employees on private nonfarm payrolls was up by 0.1 hour to 34.0 hours in March. The manufacturing workweek for all employees increased by 0.2 hour to 39.9 hours, and factory overtime was up by 0.1 hour over the month. In March, the average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.2 hour to 33.3 hours.

In March, average hourly earnings of all employees on private nonfarm payrolls fell by 2 cents, or 0.1 per cent, to $22.47, following a 4-cent gain in February. Over the past 12 months, average hourly earnings have risen by 1.8 per cent. In March, average hourly earnings of private production and nonsupervisory employees fell by 2 cents, or 0.1 per cent, to $18.90.

The change in total nonfarm payroll employment for January was revised from -26,000 to +14,000, and the change for February was revised from -36,000 to -14,000.

The impact the jobs report will have on the bond market, with Mohamed El-Erian, CEO and Co-CIO of multi-billion dollar bond fund manager Pimco ; Andy Serwer, Fortune managing editor; Robert Barbera ITG chief economist; and CNBC's Carl Quintanilla, Steve Liesman & Becky Quick:

Prof. Peter Morici of the University of Maryland commented on Friday: "The Labor Department announced the economy added 162,000 jobs, confirming my earlier, more conservative than the consensus forecast of 150,000.

As expected, temporary census jobs contributed a significant but not overwhelming 48,000 to the jobs total.

The private sector gained 128,000 new positions. This reflects moderate GDP growth—something in the range of three per cent for the balance of 2010. Not enough to bring down unemployment, which remains at 9.7 per cent.

As expected, manufacturing continued to show new verve, adding 17,000 jobs. After a long decline, America’s factories have added some jobs each month for the last three months. They have a long way to go to recreate the more than five million factory jobs lost over the last decade.

In a big surprise, construction gained about 15,000 jobs. The residential sector stabilized, and gains in commercial construction likely reflected stimulus spending. The latter should not be view as permanent.

GDP growth must speed up to more than four per cent to accomplish the jobs growth necessary to replace the more than eight million jobs lost during the Great Recession, and bring unemployment down to 6 per cent over the next three years.

The 5.6 per cent GDP gain posted in the fourth quarter of 2009 reflected accounting adjustments—mostly slower rates of draw down in inventories. Sustainable growth—demand by private consumers, businesses for expansion and government—only grew about two per cent.

The present mix of policies from Washington won’t accomplish the four or five per cent growth needed.

Strong growth requires policies to fix the huge trade deficit on oil and with China, and the crisis among America’s community banks, which finance small and medium sized businesses.

The president’s recently announced policies to expand development of U.S. oil resources and build more fuel efficient vehicles are not nearly aggressive enough, and bow to environmentalists in ways that are counterproductive to keeping the oceans clean, reducing emissions and creating jobs.

Regarding China, the president continues to procrastinate about confronting Beijing on its undervalued currency and mercantilists trade policies. The president needs to define broad macroeconomic and general trade policies—such as a tax on dollar-yuan conversions and government procurement policies that offset Chinese protection.

Without stronger policies, GDP and employment growth with remain subpar, and Americans face a tough jobs market."

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