Economists Still Waiting For Job Growth

Saturday, March 06, 2004 | 06:36 AM

Last week, Federal Reserve Chairman Alan Greenspan cautioned that a slowdown in productivity was necessary to stimulate job creation. We have previously pointed out that the Fed Chairman has this issue confused ("Getting Productivity and Employment Backwards").

Regardless, the Fed Chief remains hopeful: "We could get a pop in employment at any time.'' Any day now . . . He apparently was not talking about the February payroll data -- U.S. employers added a mere 21,000 jobs last month, well short of the 130,000 Bloomberg consensus.

Here's a sampling of what economists had to say about Friday's report:

"Employers are still very, very cautious about adding bodies. … If you are out there looking for a job, this is bad news.''
     - Bill Cheney, chief economist, John Hancock

"There wasn't anything in this report that was at all encouraging. … Conditions are not getting any better and may be getting worse."
     - Carl Tannenbaum, economist, ABN-Amro

"Many people are simply dropping out of the labor force while those who do lose their jobs are, on average, out of work for an extended period of time. The [Federal Open Market Committee] will not be influenced by the decline in the unemployment rate until the labor force participation rate is rising again."
     - Steven Wood, chief economist, Insight Economics

The market has seen "a couple of weak payrolls [reports] in a row. … People need to really assess whether the lack of job growth can be entirely attributed to productivity gains and to a movement of jobs overseas, or whether it's actually a sign that the economy is not rebounding as strongly as other economic indicators have implied."
     - Joseph Shatz, government-market strategist, Merrill Lynch

The report "appears not to mention the weather as a factor depressing payrolls but we think it was very significant -- remember jobless claims rose 29,000 in the two weeks before the payroll survey, blamed on the weather by the Labor Department. And the details show a big hit in the most weather-sensitive sector, construction."
     - Ian Shepherdson, chief U.S. economist, High Frequency Economics

"Possibly the most important bit of this report though is that the hourly wages are climbing at an annualized rate of only 1.6%. This rate of growth has only been this low during late 1986 and early 1987, and never at any other point going back to the early '60s." Without wage growth, "there are no inflation pressures, this is key."
     - Lou Brien, strategist, DRW Trading Group

"The real story on employment is a lack of hiring in any category. Normally, professional business services and health and education provide the bulk of job growth [measured in thousands], but they have been relatively flat. The only sector of notable hiring is in the temporary help service, where 32,000 jobs were created in February. That gain suggests cautious hiring intentions."
     - Stephen Gallagher, chief U.S. economist, SG Corporate & Investment Banking

Economists Are Still Waiting For the 'Pop' in Job Growth
WSJ, March 5, 2004 10:32 a.m.,,SB107849720027647629,00.html

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