Experts see few new jobs in strengthening US recovery

WASHINGTON (AFP) – The strengthening US recovery will scatter few crumbs for job seekers, experts said Friday, as latest data showed the unemployment rate rising to 5.7 percent in March.

Wary employers, many shaken by the impact of the Sept. 11 terrorist attacks, are ramping up productivity without taking on swathes of new workers, economists said.

As a result, the economic recovery is gathering pace but the unemployment rate, which lay at 5.5 percent of the workforce in February, is on the way up.

"Despite strong economic growth, the labor market will show only very gradual improvement in 2002," Merrill Lynch chief economist Bruce Steinberg said.

"That is because corporate restructuring activities will continue full force as companies resize themselves for profitability."

Still, the jobless rate was low by historical standards, experts said.

And businesses actually took on an extra 58,000 people in March – the first rise in eight months – after shedding 2,000 in February, the Labor Department data showed.

That failed to make a dent in the unemployment rate, however, because of the growing size of the potential workforce.

Many people had started to look for work as the brightening economy lifted their hopes, analysts said.

Others had remained on the jobless register because the government extended the period of unemployment benefits by 13 weeks.

But employers were being cautious, the data showed, preferring to improve productivity or hire temporary workers rather than expand payrolls. Temporary employment agencies added 69,000 jobs in March.

"It is going to be hard to get the unemployment rate plummeting in this kind of environment, even if growth remains robust, because of productivity gains," said Banc One economist Diane Swonk.

"Executives have shown their ability and willingness to hunker down in the worst conditions in the wake of Sept. 11. They are going to produce but they are going to produce cautiously," she added.

"It is exactly what you would expect."

A breakdown of the jobs data showed people’s hourly earnings edged up 0.3 percent in March.

Growth in jobs was concentrated in the services sector, where numbers increased 118,000, the data showed.

Manufacturing employment fell by 38,000 but it was the shallowest decline since December 2000. On the factory floor, meanwhile, jobs declined by 37,000.