Resurgent employment lifts US spirits

Resurgent employment lifts US spirits

After an economic lull and rising jobless figures following the destruction brought on by Katrina, the US employment market has improved since November. With more recruitment ensuing in various sectors and the cost of energy sources lowering back down to more reasonable levels the economy looks to have improved with over 200,000 jobs added to the labor market last month.

This was announced in the Labor Department report yesterday, the first such estimate post Katrina.

Job enhancement in the economy had declined steadily till August this year, after which it came to a complete standstill after Katrina. The havoc caused by the hurricanes had choked growth in jobs and other indicators completely. About 886,000 people deserted their homes and of those about 442,000, have come back, says the Labor Dept. report.

Against these past circumstances, America's corporations have now churned out 215,000 jobs in November itself and the unemployment rate has stuck to a plateau of 5% since then. The maximum jobs were created by the construction segment, followed by manufacturing and services and retail, in that order.

Earlier, there was concern that spiraling energy cost would affect spending power and affect business badly. On the contrary, as per, the report, there have been substantial retail and manufacturing orders as also a flip in the housing segment, indicating that all is not lost in the economy.

President Bush is ecstatic about the resurgence and claimed that the results emanate from a thoughtful policy of lowering taxes and controlling expenditure, law amendments and introduction of investment enhancing schemes.

However, Chairman of the Federal Reserve, Alan Greenspan, displayed a more neutral stand on the recent economic health of the nation, saying that a burgeoning budget deficit could sap private savings, harming quality of life across all over and damaging the economy in the futuristic perspective. He commented on the exorbitant cost of healthcare for the elderly in the country weighing the budget down and nullifying the economy's growth in the long run, and hence suggested control over the budget creation phase.

Nevertheless, he did acknowledge the short term gains and affirmed economic forecasts about high interest levels to harness inflation. His mixed analysis affected the stock market likewise. The stock index took a small plunge after Greenspan's analysis came through.

Some clouds of concern were cast on the report though. The per hour income averaged at 16.32 dollars, an increase of 3 cents from earlier, since the average wage increase was somewhat diffused by the 4.3% rise in inflation. The average per week wage for blue-collar employees, forming over two-thirds of the working population, dipped subtly because of lesser hours worked. Although, the 20% white collar workforce pay is not monitored by the Labor Department, other informal statistics shows a consistent rise in their income. The gap between both segments has been analyzed by economists as a resultant of demand gap in skilled and unskilled labor.

The average work hours per week dipped, albeit little, from October's 33.8 hours to 33.7 hours currently. Any loss in average work hours is traditionally viewed by economists as an indication of future slowdown in job numbers.

Hence, this aspect was considered a black spot in an otherwise bright report.

Although the unemployment rate average stood at 5%, the rates wavered amongst various segments of the population. Black workers faced more employment at 10.6 % percent in November, a rise from October's 9.1%. The white Americans had it better by a half of that average rate. The Latin Americans too faced a 6% as against 5.8% in October. The teenage population fared a tougher 17.2 %, as opposed to 15.9 % previously.

It is also feared that the current boom in construction employment may fizzle out if real estate slows down due to high interest rates of loans.

According to chief economist Diane Swonk, at Mesirow Financial, "The economy looks better on paper than it feels to the overwhelming majority of consumers."