New York: As the US economy struggles to overcome declines in housing and manufacturing, employers are becoming increasingly reluctant to hire. With the economic slowdown that started towards the end of 2006 showing few signs of dissipating, the employment situation may only worsen.
“The economy created 100,000 jobs in February, the fewest in two years, after a gain of 111,000 a month earlier”, according to the median forecast in a Bloomberg News survey of economists before the labour department’s March 9 report. Additionally, the jobless rate is projected to hold at 4.6% for a second month.
With fewer homes being built, construction companies are cutting jobs. Economists at Morgan Stanley estimate that the labour department will report a 25,000 increase in total non-farm employment with “significant job loss” in construction.
During the week of the employment survey, a return to more seasonable temperatures, snowstorms and a decline in home building were seen. These could be responsible for a higher rate of firings at construction companies in February.
Slower job growth may limit wage gains and make it difficult for consumer spending to accelerate at a time when corporations are buying less equipment and homebuilders are shying away from new projects.
The survey warns that employment in manufacturing is likely to decline by 20,000 in February and this decrease would bring to 153,000 the number of factory jobs eliminated in the last eight months.
According to economists, this could also be a fallout of the worst weekly decline in US stocks. The Standard & Poor’s 500 Index has also fallen to a three-month low, a drop fueled in part by signs of the economy slowing down.
The next few months may not reverse this trend. A report on March 6 from the Ministry of Commerce has forecast that total factory orders have declined by 4.5% in January.This too could impact the pace of new recruitments.
Along with a drop in employment, slower pace of economic growth is also being reflected in figures on productivity, worker efficiency and accelerated labour costs.
However, it is not altogether a dismal picture. While jobs in manufacturing, housing and construction may have dipped, jobs in the service sector have gone up. Employment in the US is averaging to 186,000 jobs in the last three months in sectors like education, health care, business services and trade and transportation.