ECONOMY Job seekers still have tough road, despite increasing U.S. payrolls
Companies are still cautious about new hires despite the economy.
WASHINGTON (AP) -- America's payrolls grew by 146,000 in January, a sluggish pace suggesting companies are reluctant to bulk up their work forces and highlighting the challenges faced by jobseekers. The unemployment rate fell as people left the job market.
The newest employment snapshot, released by the Labor Department on Friday, showed improvements in the job market still coming slowly despite the fact that the economic expansion has become more firmly entrenched.
President Bush's first term in office ended up showing a net gains in payroll jobs. From January 2001 to January 2005, the economy generated a net gain of 119,000 jobs. That allows Bush to escape being the first president since Herbert Hoover to have a net loss of jobs on his watch, a forecast by Democrats throughout the 2004 presidential campaign.
Companies, keeping a close eye on profit margins, are still showing caution in hiring as they cope with high energy bills and soaring health care costs for workers, economists said.
"The economy is recovering, but it is still difficult for people looking for a job to find work," said Lynn Reaser, chief economist at Banc of America Capital Management. "Companies are only cautiously putting out the help-wanted signs."
The overall civilian unemployment rate declined to 5.2 percent in January, from 5.4 percent in December, as people left the job market for any number of reasons. January's jobless rate was the lowest since September 2001.
On Wall Street, though, January's lackluster payroll figure helped to send stocks sharply higher on investors' hopes that the Federal Reserve might be less aggressive in raising interest rates. The Dow Jones industrials gained 123.03 points to close at 10,716.13.
Meanwhile, the share of the U.S. population working or actively seeking a job dropped in January to 65.8 percent, the lowest reading since June 1988.
The 146,000 gain in payrolls in January fell short of economists' forecasts for an increase of around 200,000. Jobs gains for December came in at 133,000, down from an initial estimate of 157,000.
"The labor market climate has yet to fully defrost," said Ken Mayland of ClearView Economics.
January's job gain pushed total payrolls to 132.57 million. That was just above the level when payroll employment peaked in February 2001, the month before the economy fell into recession.
Bush said he was pleased with the employment figures.
"That's a good sign. More people are going to work around our country," he said. "But we shouldn't be content. I'm looking forward to working with the members of Congress to create the conditions for continued economic expansion."
Questions about the health of the nation's labor market dogged Bush throughout his first term and was a hot-button issue in the presidential campaign. Ultimately, the jobs situation and the economy wasn't enough of a concern to deny Bush a second term.
However, Bush's critics, including Democrats and labor unions, pointed to Friday's employment figures as further evidence the president's economic policies are flawed. "The recovery still has a long way to go to deliver satisfactory gains in jobs and wages," said Sen. Jack Reed, D-R.I.
AFL-CIO President John Sweeney struck a similar note: "America's working families are still struggling to gain their footing on the slippery slope of today's labor market."
Workers' average weekly earnings dipped to $535.16 in January, from $535.73 in December. There were 7.7 million people unemployed in January with the average duration of 19.3 weeks without work, the same as in December.
Federal Reserve policy-makers' assessment of the labor market is that "conditions continue to improve gradually." On Wednesday, they boosted short-term interest rates for the sixth time since June.
Economists believe rates probably will go up again at the Fed's next meeting March 22. On Wednesday, they boosted short-term interest rates for the sixth time since June.
Fed Chairman Alan Greenspan, speaking in London on Friday, didn't discuss interest rate policy or the jobs situation. But he struck a somewhat encouraging note on a possible improvement to the United State's yawning trade deficits.
Greenspan said a variety of factors from a weaker dollar to tougher budget discipline in Congress may finally start to restrain the deficit's explosive growth.
In January, job gains in the service sector were partially offset by job losses at factories and in construction.