Factories lead US recovery, spur broader job growth

Factories kick-started the US economy from its worst recession in seven decades. Now they’re taking the lead in reviving the labor market.

Manufacturers so far this year have added 45,000 workers to payrolls, the biggest three-month gain in the industry since March-May 2004. A 17,000 increase at factories last month was part of a 162,000 rise in employment, the most in three years, Department of Labor figures showed on April 2.

The gains in factory employment underscore recent data that show manufacturers are ramping up production as companies invest in equipment, replenish inventories and export more goods. Caterpillar Inc. is among those adding staff, showing the recovery that began last year is beginning to add the jobs needed to lift consumer spending and sustain the expansion.

Manufacturing is “now adding jobs directly and probably indirectly as well since some service-sector workers are doing work for manufacturers,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. “If they’re doing work for a manufacturer then really that job was created by manufacturing.”

Health-care companies and temporary-help service providers joined manufacturers in adding 123,000 jobs to private payrolls last month, the third consecutive increase and the biggest since May 2007, a sign that the expansion is becoming more entrenched.

The increase in payrolls in March was the third in the past five months and the biggest since March 2007, the labor department figures showed last week. The increase included 48,000 temporary workers hired by the government to conduct the census.

The government revised the January and February job count up by a combined 62,000, putting the March gain at 224,000 after including the updated data.

“The federal government didn’t hire nearly as many Census workers as thought,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said in an e-mail to clients. “It was the private sector that stepped up to the plate. The growth was broad-based as well.”

Hiring at the Census Bureau for the population count may have the biggest impact on payroll figures in April through June, when the bulk of the additions will take place. The program will then subtract from the job count the following months as employees are dismissed after the work is done. For that reason, economists will focus on the employment figures excluding the government. By that measure, job prospects are brightening.

“The expectation going in was that overall we’d have more census jobs,” Gault said. “It signals that there are going to be some big gains in April and May.”

Employment at government agencies climbed by 39,000 workers, reflecting the increase in census staff. Budget- constrained state and local governments reduced headcount last month. Construction companies, which may have been most influenced by the weather, boosted payrolls by 15,000 workers, the first increase since June 2007.

The jobless rate was unchanged even after Americans who had previously dropped out of the workforce decided to resume the job search, pointing to growing confidence that the world’s largest economy will continue to grow. Still, unemployment may be slow to recede as more people enter the job market, giving the Federal Reserve scope to hold its benchmark interest rate near zero in coming months.

Treasury securities dropped after the increase in employment showed the expansion was becoming self-sustaining. The yield on the benchmark 10-year note climbed to 3.94 percent on April 2 in New York, the highest since June. The stock market was closed that day in observance of Good Friday.

“We have some more work to do, but I think the economy is definitely getting stronger,” Treasury Secretary Timothy F. Geithner, 48, said in an April 2 interview with Bloomberg Television in New York after the labor department report. “We’ve made a lot of progress, we’ve got some work to do still and it’s going to take some time to heal the damage.”

Caterpillar, the world’s largest maker of construction equipment, in March said it plans to hire 500 workers this year to expand a generator plant in Newberry, South Carolina.

Not all the data in the employment report was positive. The figures showed average earnings per hour dropped last month and the number of people working part time because they couldn’t find full-time work increased.

The so-called underemployment rate—which includes the part-timers and people who want work but have given up looking—increased to 16.9 percent from 16.8 percent.

The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more rose to a record 44.1 percent of all jobless.  Bloomberg News