Hope for recovery as US jobless rate stable

THE US unemployment rate held steady at 9.7 per cent last month, reviving hopes that the economic recovery is gathering steam.

However, American businesses and the government shed 36,000 positions in February – a faster rate than the 26,000 job losses in January. The data was nonetheless significantly better than predictions by most economists, who had expected winter storms during the month to raise the tally of losses to more than 60,000.

“The February jobs report suggests that the economy is on the verge of creating jobs, and that it will break through to sustained job creation beginning in March,” said Nigel Gault, chief US economist at IHS Global Insight.

The data could ease pressure on President Barack Obama as he makes a final push to secure Congress approval for healthcare legislation. Although Mr Obama had said job creation was his priority this year, he is expected to spend a good portion of this month trying to secure a vote in favour of his contentious healthcare package.

Republicans did not soften their criticism in the light of the employment data. “The economy is not creating the jobs American families desperately need,” said Dave Camp, the Michigan Republican and member of the House ways and means committee.

“These numbers make it clear that instead of spending virtually every day trying to ram through a government takeover of healthcare that the American people don’t want and can’t afford, Congress should be laser-focused on promoting job creation and economic growth.”

The US economy is growing again – at a rapid 5.9 per cent in the fourth quarter last year – but the labour market has lagged. Many companies have stopped laying off workers, but are still not sufficiently confident of strong demand to hire new workers.

High productivity readings – of 6.9 per cent at the end of last year – have raised hopes of an imminent wave of new hires as executives realise they have squeezed all the possible work out of existing employees. – (Copyright The Financial Times Limited 2010)