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Solid US job gains pointing to a stronger recovery

Published on NewsOK Modified: July 3, 2014 at 11:03 pm •  Published: July 3, 2014
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Over the past three months, job growth has averaged a healthy 272,000. And in May, the economy surpassed the jobs total from December 2007, when the Great Recession officially began.

Researchers at the liberal Economic Policy Institute estimate that 6.7 million more jobs would have been needed to keep up with U.S. population growth.

One key challenge is whether the job gains will pull more Americans back into the workforce. Many people who lost jobs during the recession and were never rehired have stopped looking for work. Just 62.8 percent of American adults are working or are looking for a job, compared with 66 percent before the downturn.

The number of long-term unemployed has dropped 1.2 million over the past year to just under 3.1 million. But the government data suggests that numerous people without jobs have given up their searches — a trend that could drag on future U.S. growth.

And average pay has grown just 2 percent a year during the recovery, roughly in line with inflation and below the long-run average annual growth of about 3.5 percent.

The lack of strong wage growth means the Federal Reserve may not feel pressure to start raising short-term interest rates soon as a way of controlling inflation.

"We are still not seeing any significant pickup in wage growth," Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a research note. "We suspect that Fed officials will continue to cling to the view that there is still plenty of slack in the labor market."

However, the steady hiring means businesses are increasingly competing to find workers.

"It's becoming more difficult to find the candidates that we're looking for," said Brandon Calvo, chief operating officer at Cosentino North America, a Houston-based firm that sells materials for kitchen counters and bathrooms.

The job gains have intensified despite the slump that kicked off 2014.

The economy's contraction in the first three months of this year was the sharpest since the recession. Ferocious winter storms caused factories to close and prevented consumers from visiting shopping malls and auto dealers.

Still, the frigid weather failed to freeze hiring. Job gains ramped up with the warmth of spring and summer.

"We've seen hiring growth out of the winter because it was stagnant," said Richard Bitner, vice president of marketing for Visiting Angels, a home health care services firm headquartered in Havertown, Pennsylvania.

Most economists say annualized economic growth likely reached a solid 3 percent to 3.5 percent in the April-June quarter. Growth over the entire year should be about 2 percent, they say, similar to last year's 1.9 percent expansion.

Several other signs point to the economy's brightening health.

Auto sales rose at the fastest pace in eight years in June. Factory orders picked up last month. And home sales strengthened this spring after having sputtered in the middle of last year when higher mortgage rates and rising prices hurt affordability.

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AP Economics Writer Paul Wiseman contributed to this report.