Job slump not so bad by comparison
Growth slowdown lighter than previous three years
WASHINGTON — Two straight months of disappointing job growth have raised fears that the U.S. economy is stalling for the third year in a row.
But don't despair just yet: This year's slowdown is an improvement on last year's, which was an improvement on the year before's.
Hiring decelerated to an average 135,000 a month in March and April. That was slower than the December-February pace of 252,000 a month, but still a solid six-digit gain each month.
During last year's slowdown, from May through August, job growth came in below 100,000 for four straight months. The average was 80,000 jobs a month.
In 2010, the slowdown, from June through September, consisted of four straight months of job losses. The average loss was 76,000.
Each year, the slowdown has been at a significantly higher level than the year before.
"We're forming a base," says economist Joel Naroff of Naroff Economic Advisors. "The level of confidence going into the spring and summer is definitely higher this year than last year."
Naroff expects the economy to create more than 2.4 million jobs this year, which would be the most since 2005. Last year, 1.8 million jobs were created. In 2010, 1 million. Today, the government will issue its employment report for May. The consensus forecast is that employers added 158,000 jobs.
The previous two years, the economy has endured a series of shocks. Europe's debt troubles undermined consumer and business confidence in 2010. Last year, Middle East unrest sent oil prices surging. An earthquake and tsunami in Japan cut off supplies to many U.S. manufacturers. A political clash in Washington over the federal borrowing limit nearly forced the U.S. government to default and rattled consumers and businesses.
The economy has dodged such blows in 2012. A run-up in gasoline prices has begun to reverse just in time for the summer driving season. More than 1.8 million Americans have been hired over the past year.
Those gains feed on themselves. More people with paychecks means more spending on goods and services, which can lead companies to hire even more.
Many economists think the jobs slowdown the past two months may have occurred because growth surged from December through February — perhaps too much. Warm weather allowed construction firms and other employers to add jobs earlier than usual, effectively swiping jobs from the spring. The weak March and April jobs numbers may have been payback.
Still, the job market is far from strong. Economists expect that the government will report today that the economy generated a modest 158,000 jobs in May.
The number of people applying for unemployment benefits rose last week to a five-week high — though it's still hovering near the 375,000-a-week level that typically suggests hiring is strong enough to lower the unemployment rate.
Economists are expecting job growth to reaccelerate as the year grinds on. One good sign is that employers advertised 3.74 million job openings in March, the highest figure since July 2008.
Many of those openings are at U.S. factories. Manufacturers are on pace to add more than 415,000 jobs this year, most since 1984. Some are even complaining of a shortage of qualified applicants. Ehrhardt Tool & Machine Co. in Granite City, Ill., wants to add five skilled workers to its staff of 113. The jobs pay more than $22 an hour.
"If you want a skilled manufacturing worker right now, you just can't find them," says company president Robert Roseman.