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U.S. Job Growth Surges Again

Payrolls in May climb by 248,000 and figures for the two previous months are revised upward. 'Hiring is back,' one economist says.

June 05, 2004|Warren Vieth | Times Staff Writer

WASHINGTON — U.S. employers added 248,000 jobs in May, extending a hiring streak that could provide President Bush with a net increase in employment by election day.

Adding to evidence of an employment surge, the Labor Department on Friday sharply boosted two of its previous job creation estimates, to 353,000 for March and 346,000 for April. The unemployment rate for May remained unchanged at 5.6%.

"Hiring is back," said Susan Hering, senior U.S. economist for investment bank UBS in Chicago. "It is very broad-based, and it puts the economy on sounder footing."

Last month's job gains were bigger than many economists expected. After bottoming out in August, payroll employment has posted nine consecutive monthly increases, restoring 1.4 million of the net 2.6 million jobs lost during the first 31 months of Bush's presidency.

If hiring continues at its recent pace, it would erase the remaining 1.2-million job deficit by November, denying Democrats the opportunity to portray Bush as the first president since Herbert Hoover to finish his term with fewer jobs than when he began.

"This is confirmation that a solid economic recovery is here to stay," said Sung Won Sohn, chief economist at Wells Fargo Bank in Minneapolis. "If the economy continues to hum, we should be able to get 250,000 jobs a month."

Even if that occurs, the pace of job creation may not be sufficient to bring about a big reduction in the unemployment rate, economists said. Discouraged workers who had dropped out of the labor force during the downturn were expected to start searching for jobs again, adding to the unemployment count even as employers create jobs.

Meanwhile, gasoline prices have been at record highs and market interest rates -- such as those for mortgages -- have risen, leaving voters with a somewhat muddled picture of the nation's economic performance, analysts said.

Some states are lagging behind in the job recovery. California's jobless rate was 6.2% in April, the most recent month for which figures were available, and the rate of job creation has fallen short of the national trend. State employers have restored 91,400 jobs since last July, reducing the net California job loss during Bush's term to 237,000.

The latest job figures make it virtually certain that Federal Reserve officials will begin raising short-term interest rates when they meet June 29 and 30, analysts said, ending a three-year easing cycle that took rates to the lowest level since the 1950s.

That prospect rattled the bond market, causing prices to fall and short-term yields to rise to two-year highs. But stock traders were heartened, and the Dow Jones industrial average rose 46.91 points to 10,242.82.

Bush administration officials celebrated the jobs report and said the president's tax cuts had contributed to the hiring surge.

"Today's job report shows that the American economy is strong, and it's getting stronger," Bush told reporters in Rome, where he was meeting Italian leaders and Pope John Paul II.

"The policies in place are working, the entrepreneurial spirit is strong, the small-business sector of our economy is vibrant," the president said. "And I'm pleased the American worker is doing their job."

Administration critics noted that total payrolls were still 1.2 million lower than when Bush took office and that the job deficit grows to 1.9 million if government hiring is excluded.

"Guess what? There are still 1.9 million jobs lost during this presidency," said Massachusetts Sen. John F. Kerry, the presumptive Democratic nominee for president, during a rally at the University of Minnesota. "There are still too many people who can't afford healthcare, can't afford to go to college. There's too many people struggling, while at the top end, people get ahead. I think it ought to be the reverse."

A Democratic advocacy group, America Coming Together, said the U.S. would need to create 1.6 million jobs a month for the rest of Bush's term to match the record of his predecessor, Bill Clinton, or more than 500,000 a month just to catch up with his father, George H.W. Bush.

"We're digging out of a hole, but it's a deep hole," said Jared Bernstein, senior economist at the liberal Economic Policy Institute.

The Bush campaign countered with a new television ad accusing Kerry of grasping for bad news in the midst of a robust recovery.

"He's talking about the Great Depression," states the ad, which is scheduled to begin running Monday on national cable channels. "One thing's sure: Pessimism never created a job."

Any remaining perception that America is experiencing a jobless recovery is now "obviously invalid," Vice President Dick Cheney told reporters aboard Air Force Two. "The Democrats will have a hard time being credible with the notion that somehow this is a bad economy," he said.

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