Robust growth in jobs realized

Robust employment growth has returned to the U.S. economy, with 625,000 jobs created in the past two months and 867,000 since the beginning of the year.

The report from the Labor Department yesterday heralded the end of the jobless recovery of the past two years. It showed job creation grew steadily from a trickle in August into an economywide gusher in March and April, while the unemployment rate dropped from 6.1 percent to 5.6 percent.

In a highlight of the blockbuster report, the hard-hit manufacturing sector, with more than 2 million job losses since July 2000, created 37,000 jobs in the past three months — the first new factory jobs in four years. But nearly every profession recently has joined in the job bonanza.

Financial markets reacted sharply to the news, which was seen as the evidence of well-entrenched job growth that the Federal Reserve wanted to see before raising interest rates.

The unexpectedly strong job gains prompted markets to brace for a rate increase as early as next month. Stocks slumped, while the dollar and market interest rates surged.

The jobs report marked a turning point politically as well as economically, because Democrats have exploited discontent over the long job drought. While the job deficit since President Bush took office is still high, at 1.5 million, at the current rate of job creation, it could be wiped out by the November election.

Mr. Bush rejoiced at a campaign stop in Iowa, attributing the breakthrough to the “entrepreneurial spirit” of businesses, which he says his tax cuts helped to unleash.

“Since last August we’ve added 1.1 million jobs. People are finding work in this country,” he said. “The tax relief we passed is working.”

Sen. John Kerry of Massachusetts, the presumptive Democratic presidential nominee, acknowledged the “good news” on jobs, but said more than 8 million people remain unemployed and other problems persist. He noted that the price of oil hit nearly $40 a barrel yesterday, a 14-year high, in New York trading.

“We still have a long way to go,” he said, decrying the “squeeze on the middle class” during the Bush years.

Economists said the job news opens up a new chapter in the economic recovery.

“It confirms the economic expansion is now self-sustaining,” said Edward Yardeni, chief investment strategist at Prudential Equity Group.

With the expansion now producing hundreds of thousands of jobs and increasing consumers’ incomes each month, it no longer requires extraordinarily low interest rates or tax cuts to keep going — a big change from the past three years, he said.

The report shows that businesses made a critical transition in the first four months of the year. They stopped asking their staffs to work longer hours and produce more, and they instead started hiring new workers. The average workweek was unchanged at 33.7 hours, while manufacturing hours actually dropped during April.

Many businesses are deciding to hire people who had been working for them as temporary employees or contractors, turning their jobs into full-time positions, said Michael D. Alter, president of SurePayroll, a payroll-services firm.

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