It's becoming an ordeal.
For months, U.S. President Barack Obama, Federal Reserve chairman Ben Bernanke, investors and the millions of Americans who lost their jobs in recession have been waiting for the same thing: a big pop in hiring that would show that the economic recovery finally is entrenched.
Their wait will continue for at least another month. Despite an array of recent evidence suggesting that American employers are poised to replenish their depleted payrolls, the benchmark indicator of the state of the U.S. labour market - released Friday in Washington - remains frustratingly mediocre.
The Labour Department's latest monthly survey of households showed the unemployment rate dropped to 9 per cent in January, the lowest since April, 2009, although still very high by historical standards. A separate Labour Department poll of companies said payrolls increased by a mere 36,000, compared with a gain of 121,000 in December.
Economists were confounded by the mixed result. The median estimate of 85 Wall Street analysts polled by Bloomberg News was for an increase in payrolls of 146,000 and an unemployment rate of 9.5 per cent, which would have been slightly higher than the December rate of 9.4 per cent. Mr. Bernanke told an audience Thursday that he thought stronger payroll reports and lower unemployment rates would come "soon."
Severe winter storms that swept through the U.S. Midwest, south and New England during the week the Labour Department conducted its survey wreaked havoc with the data. For example, 866,000 people said they were unable to go to work because of bad weather, three times more than a typical January, according to economists at Royal Bank of Canada. Also, construction and transportation-and-warehousing companies reported big drops in employment. "Today's employment report was severely affected by the weather," Bank of America economist Ethan Harris told clients in a report. "Our advice to market participants is to look beyond this morning's data."
Traders appeared to do just that. U.S. benchmark stock markets ended trading on Friday at their highest levels in two-and-a-half years, while the dollar strengthened and the yield on 10-year Treasury notes rose 10 basis points to 3.64 per cent, the highest since May.
The sanguine response of traders reflects increasing confidence that the recovery is taking hold. The number of unemployed people fell by 590,000 in January and private payrolls increased by 50,000. Factories added 49,000 workers last month, countering a decline of 12,000 government employees.
"By the middle of this summer, you will see small businesses pouring on the jobs," said Adam Robinson, a former recruiter who now is chief executive officer of Chicago-based Hireology LLC, which sells Web-based software to help companies manage hiring decisions.
Smaller companies do the bulk of the hiring in the United States. Mr. Robinson's optimism is based on growing interest in Hireology, a new venture. The company offers guides and scorecards that help employers interview and rank candidates. Mr. Robinson started putting word out about Hireology in the fall. Since early January, he says his phone has been ringing off the hook. "It was like someone cut the anchor," Mr. Robinson said in an interview. "I am incredibly optimistic about this year, based on what I am seeing. I think we are going to have a great two-year run here."
But considering the recession has been over for more than a year, waiting until the summer for a significant increase in hiring will feel like an eternity for the U.S. policy makers who have gone to extraordinary lengths to lower the unemployment rate.
The Labour Department released revised figures Friday that showed the U.S. lost 8.5 million jobs as a result of the recession. In 2010, the economy replaced only 909,000.
Mr. Bernanke on Thursday expressed worry about the fates of people who remain unemployed for too long, saying economic study shows lengthy periods of unemployment cause skills to atrophy, forcing people to accept lower-paid work or none at all.
However, the U.S. economy must do more than create another seven million jobs to undo the damage of the recession because the labour force expands by about 125,000 people a month as students leave school and immigrants arrive. Michael Greenstone and Adam Looney, economists at the Washington-based Brookings Institution, put the actual "job gap" caused by the recession at 12.4 million.
If the economy adds 208,000 jobs a month - the average monthly rate for the best year of job creation over the past decade - the gap won't close until July of 2023, according to the Brookings economists, well below the 146,000 median estimate of 85 Wall Street analysts.Report Typo/Error