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Businesses Add 308,000 Jobs in March


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Businesses Add 308,000 Jobs in March

Friday, April 02, 2004

WASHINGTON — U.S. employment rose last month at the fastest pace in nearly four years, easily outstripping expectations, as workers returned after a grocery store strike and construction hiring bounced back on better weather, a government report on Friday showed.

The latest report from the Labor Department offered comfort to President George W. Bush (search) as the jobs market — a hot political issue in the U.S. presidential campaign — finally made a decisive break to the upside.

Non-farm payrolls climbed 308,000 in March, the Labor Department said, the biggest gain since April 2000 and well above the 103,000 rise expected on Wall Street.

The unemployment rate ticked up to 5.7 percent from the two-year low of 5.6 percent seen in January and February.

Upward revisions to January and February payrolls helped contribute to the positive tone of the report, which could fuel expectations that the Federal Reserve may be closer to raising overnight interest rates from their current 1958 low of 1 percent than had been thought.

The March rise in payrolls reflected the resolution of a labor dispute at grocery stores in southern California that had idled 72,000 workers. The department said the return of those workers helped fuel a 47,000 increase in retail employment last month, but it did not quantify the impact.

Economists had said the return of those workers would boost payrolls, but that the impact was hard to gauge because it was unclear how many temporary replacement workers were being let go.

The report showed job gains were widespread across industries.

While a long-hoped for rise in manufacturing employment did not appear, the department said factory payrolls were unchanged in March, finally breaking a string of 43 consecutive monthly declines.

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I was having a fight with my boss all month who was saying Bush should be thrown out because of job creation "blah blah blah"..

Now he went down to get breakfest and I wrote on his board in his office in bold letters..

March Job Growth Strongest in 4 Years....lol & BUSH/CHENEY 2004

He hasn't come back yet but I can't wait to ask him how it tastes???

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U.S. Economy: March Factory, Employment Gauges Rise (Update4)

April 1 (Bloomberg) -- A U.S. manufacturing index unexpectedly rose last month as production increased and more factories added workers than at any time since Ronald Reagan was president.

``Plain and simple, this report tells us that the manufacturing sector is smoking,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. ``The breadth of the expansion as well as its speed is breathtaking.''

The Institute for Supply Management's factory index for March rose to 62.5, close to a two-decade high of 63.6 in January, from 61.4. The index has now exceeded 50, signaling expansion, for 11 months. The number of Americans filing initial unemployment claims dropped to 342,000 last week from a revised 345,000 and producer prices rose less than expected in February, the Labor Department said in Washington.

The purchasing managers' employment index rose to 57, the highest since December 1987, from 56.3 the prior month. That bolsters speculation that tomorrow's monthly jobs report will show the first gains for manufacturing since July 2000. Total employment is projected to rise by 120,000 workers, the most since December 2000, according to the median forecast in a Bloomberg News survey of economists.

Job growth has become a central issue in President George W. Bush's campaign for re-election. The U.S. has shed 2.3 million jobs in three years, which Democratic challenger John Kerry says positions Bush as the first president since Herbert Hoover to end a term with fewer jobs than when he started.

Jobs and Politics

Tax cuts Bush won last year have helped spur the economy to its fastest growth in 20 years and at least six straight months of job gains. The president is pushing Congress to make the tax cuts permanent to help create jobs at a faster pace. Kerry, a Massachusetts senator, is promising to create 10 million jobs over four years as president. Part of Kerry's plan includes a tax credit for companies that create jobs in the U.S., paid for by an end to tax breaks on some overseas income.

U.S. producer prices rose 0.1 percent in February, restrained by declines in costs of drugs, light trucks and home heating oil, the Labor Department said separately. U.S. construction spending fell 0.1 percent in February, a second straight drop, led by declines in homebuilding and government projects, the Commerce Department said. The fall to a $921.1 billion annual rate of spending followed a revised 0.8 percent decline in January.


Economists had expected a reading of 59.5 in the factory index, based on the median of 67 forecasts in a Bloomberg News survey. Economists had projected claims would edge up to 340,000, based on the median of 37 forecasts in a Bloomberg News survey, from the 339,000 initially reported for the week earlier.

Bonds dropped after the manufacturing and claims reports. The benchmark 4 percent note due February 2014 declined 11/32 point, pushing up its yield 4 basis points to 3.88 percent at 4:23 p.m. in New York.

Companies in the U.S. Midwest are preparing to hire more workers to keep pace with ``strong demand,'' Michael Moskow, president of the Federal Reserve Bank of Chicago, said in a speech at the University of Dayton in Ohio. ``Many of our business contacts have told us that they will have to hire soon if strong demand continues'' and ``I think that it will.''

Companies produced more cars, electronics and business equipment last month as they attempted to restock depleted shelves and warehouses. Qualcomm Inc. and Avnet Inc. are among manufacturers benefiting from rising orders as businesses boost spending on new equipment. The acceleration may help stoke the economic expansion and generate more jobs.

Employment Index

``We feel a lot better today than we did six months ago,'' said Rob Gillette, 44, chief executive officer of Honeywell Transportation Systems, a unit of Honeywell Corp., with 2003 sales of $3.7 billion. ``I think that would be true across all of our businesses. We don't see a slowdown.''

The first-quarter overall index average of 62.5 was the highest since the fourth quarter of 1983. The March employment index was the highest since a reading of 59 in December 1987. The economy is forecast to add 5,000 manufacturing jobs in tomorrow's monthly jobs report, according to the median estimate.

The Tempe, Arizona-based group surveys more than 400 companies in 20 industries, including clothing, printing, transportation, furniture and plastics. Manufacturing accounts for about one-seventh of the economy.

``In March, every industry group cited rises in new orders, production, and prices'' and 11 industries reported job gains, economist Stanley said.

Keeping Up

The production index, a gauge of work being performed, rose to 65.5 from 63.9 in February. The new orders index, which accounts for about a third of the total, eased to 65.7 from 66.4. The index of inventories fell to 48.3 from 49.4, indicating inventories are being run down at a faster pace.

The backlog of orders index rose to 63.5 from 62. The new export orders index rose to 62 from 54.9. The index of supplier deliveries, which measures how long it takes to get materials, jumped to 67.9 from 62.1.

Qualcomm and Avnet are among companies having trouble keeping up with demand. Qualcomm, the world's No. 2 maker of mobile-telephone microchips, may not be able to fully meet demand until May or June as it works with foundries, testers and packagers to try to get enough semiconductors, Chief Executive Officer Irwin Jacobs said in an interview last week.

Avnet, which distributes semiconductors used in products such as automobiles, wireless phones and computers, said earlier this month the time it takes to fill orders has lengthened ``significantly'' to between 10 weeks and 14 weeks, according to Chief Executive Roy Vallee.

Prices Rise

Work at factories, which accounts for almost 90 percent of industrial production, rose 1 percent last month after rising 0.2 percent in January, according to a report from the Federal Reserve issued earlier this month. Production of consumer durable goods, which includes automobiles, furniture and electronics, rose 1 percent while production of business equipment, such as transportation and information processing equipment, rose 1.1 percent in February.

The supply managers' prices paid index rose to 86 last month from 81.5. That was the highest since January 1995. If that trend continues, ``the economy may experience some ``weakness due to commodity inflation,'' said Christopher Low, chief economist at FTN Financial in New York.

The 0.1 percent increase in prices paid to factories, farmers and other producers that the Labor Department reported today followed January's 0.6 percent rise. Excluding volatile food and energy prices, the so-called core rate also climbed 0.1 percent after rising 0.3 percent a month earlier.


Herman Miller Inc., which makes the Aeron chair and other office furniture, said last month its fiscal fourth-quarter profit will fall short of analyst expectations because of higher costs. A forecast 10 percent increase in sales from the same period last year won't be enough to make up for an increase in the price of steel, the Zeeland, Michigan-based company said.

55 percent of senior factory executives expect to increase payrolls this year, while 16 percent expect a decline, according to the results of a survey by the National Association of Manufacturers released last week. Most of the increases were concentrated among small companies, where 73 percent plan to add jobs and none expect reductions.

The number of Americans filing initial claims for jobless benefits declined to 342,000 last week, below the average for this year's first three months, the Labor Department said today. Initial claims dropped by 3,000 from a revised 345,000 the week before. Filings have averaged 351,460 this year, down from 402,100 for all of 2003.

Manufacturing in the 12 euro nations unexpectedly expanded at a faster pace last month as rising orders prompted companies to boost production. An index based on a survey of 2,000 purchasing managers compiled for Reuters Group Plc by NTC Research Ltd. rose to 53.3, the highest in more than three years, from 52.2 in February.

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