More U.S. jobs seen in June, buoying Bush
Wed Jun 30, 2004 12:38 PM ET
By Andrea Hopkins
WASHINGTON, June 30 (Reuters) - U.S. employment likely surged again in June, taking gains this year to some 1.4 million jobs and bolstering President George W. Bush's economic record ahead of the November election, analysts said onWednesday.
Economists believe 250,000 jobs were created this month, virtually matching May's jump of 248,000, though the unemployment rate probably will not budge from 5.6 percent because newly hopeful job-seekers are returning to the job market.
"I think the gains will be quite widespread again, and as we saw in April and May, we are likely to create slightly more higher-paying than lower-paying positions," said Lynn Reaser, chief economist at Banc of America Securities.
Even if the unemployment rate does not decline, analysts expect the Labor Department's closely watched payrolls report, due on Friday, to confirm broad strength in what months ago was still only a tepid economic recovery.
The creation of nearly a million jobs in the last three months ended years of worry about the slow recovery from the 2001 recession and cemented expectations the Federal Reserve will begin raising interest rates to head off inflation.
While 1.2 million jobs have been lost since Bush took office, that deficit could easily be erased if hiring continues at its recent pace, and talk of Bush being the president with the worst job record since Herbert Hoover has faded.
"The economy has turned very sharply in Bush's direction, so his biggest weakness is becoming a strength," said Cary Leahey, senior U.S. economist at Deutsche Bank Securities.
GOOD NEWS, BAD NEWS
The shift in political rhetoric from the "jobless recovery" lament of the Democrats to "nearly a million jobs in 100 days" of the Bush administration appears to have reached consumers, whose confidence levels hit the highest level in two years in June, according to a Conference Board report this week.
"They get the feeling that things have turned the corner and that's making them much more hopeful," said Joel Naroff, president and chief economist of Naroff Economic Advisors.
"They're beginning to focus more on the idea of fundamental economic and consumer confidence rather than the Iraq war that had been driving confidence previously," he added.
Friday's report is also expected to show a sixth straight monthly rise in hourly earnings, though the workweek will likely be unchanged at 33.8 hours, according to a Reuters survey of economists.
Longer hours and fatter paychecks are seen by experts as evidence the economy is on the threshold of even stronger job gains in the months ahead.
"The next step after increasing the length of the workweek, paying perhaps more overtime (or) hiring more temporary workers ... (is) hiring back some of the previously laid off workers or ramping up staffing in general," Reaser said.
But the improving job market and higher wages also herald a shift in the stance of the Federal Reserve, which is expected to raise official interest rates several times this year to prevent price increases from overheating the economy.
The market is betting the Fed will raise rates a quarter of a percentage point on Wednesday and by another 25 or 50 basis points in August -- a politically sensitive move because higher rates are unpopular with America's debt-ridden voters.
"(Another strong job report) will, at least in the eyes of the market, increase the pressure on the Fed that they need to do 50 in August and they're behind the curve," Leahey said.
"I just don't think the Fed is ready, in a political election year, to pick up the pace that rapidly, but it is possible," he said.
reuters.com |
