- The Washington Times - Friday, May 6, 2005

A surge of 274,000 new jobs last month in health care, education, construction, finance and other service- and housing-related industries cast doubt on assertions the economy is going through a “soft patch.”

The robust jobs report from the Labor Department yesterday offered estimates of job growth that were 93,000 higher in the past three months and brought the monthly average of new jobs to nearly a quarter million.

Among the major industries, only manufacturing continued to experience job losses, while the unemployment rate remained at 5.2 percent last month as 605,000 idled workers were drawn back into the market to absorb the new jobs.

“The feared ‘soft patch’ looks now like just a puddle by the side of the road,” said Bill Cheney, chief economist with John Hancock Financial Services, referring to widespread fears that the economy had fallen into a rut caused by high energy prices.

“The U.S. jobs machine has finally shifted into a higher gear,” he said, noting that average wages and the average workweek rose in tandem with the increase in job growth.

Mr. Cheney called the surge of workers rejoining the labor force “quite heartening” because “we’ve had millions of people standing on the side for a long time waiting for job openings.”

The dip of 6,000 in manufacturing jobs last month — primarily in textiles and furniture — is not “a big deal,” he said, while the surge of 47,000 construction jobs is “not surprising given the strength of the housing market.”

Other areas of strong growth included 35,000 new jobs in health care and education, 36,000 new positions in professional business services, and 58,000 openings in leisure and hospitality businesses — particularly food and drinking places.

A frenzy of drilling for oil and gas has pushed up minerals and mining jobs by 31,000 in the past six months, and even the hard-hit telecommunications sector saw job growth of 7,000 last month after 41/2 years of declines.

“This report is very reassuring,” said Mr. Cheney, who added that its picture of jobs and income strength is confirmed by evidence of swiftly growing income-tax receipts flowing into government coffers.

Some said the job spurt would be short-lived, however.

“Common sense tells us this pace of payroll job creation is unsustainable,” given “the implosion of U.S. automakers,” slumping orders and production, rising interest rates and flat disposable incomes, after adjustment for inflation, said Richard Yamarone, economist with Argus Research Corp.

“Demand simply isn’t strong enough to justify any sustained and voracious hiring spree,” he said, though he called the report “the silver lining of a rather gloomy cloud of economic data” in recent months.

The upbeat jobs picture appears out of sync with a marked decline in consumer confidence in the past three months, economists noted. Usually, confidence is closely tied to the growth in jobs, but recently consumers seem to be taking their cues from record-high gas prices and a drooping stock market instead.

Republicans in Congress and the Bush administration hailed the revival of job growth and said it was a result of their tax cuts.

“We have had two years of solid job growth because Americans elected a Republican Congress that is putting the right policies in place,” said House Speaker J. Dennis Hastert, Illinois Republican. “We’ll continue to do everything we can to keep the economic engine roaring.”

Scott Lilly of the liberal Center for American Progress said that while job growth has risen back to historic averages, wage growth remains below par, particularly after taking inflation into account.

Average hourly earnings rose 0.3 percent last month, he noted, but if inflation maintains its recent pace of more than 3 percent, that will leave workers with no gain in purchasing power.

The Republicans “measure success in very different terms than American workers and their families,” he said. “Continued success in these terms will have half the country living in poverty in another two decades.”

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