Pallid spring burgeons
US jobs data: America's recessionary pit wasn't bottomless -- at least that's the read from March's employment data. The first decent rise in US job growth since November 2007 suggests that the labor market recovery is genuine and 12 per cent unemployment has been averted. But growth in the ranks of the long-term unemployed, coupled with declines in real wages, suggest a slow recovery with a higher new normal jobless rate.
March's rise in payroll employment of 1,62,000 included only 48,000 census workers, so the net rise in private sector employment was significant, the first above 1,00,000 since November 2007. As in February, temporary employment surged, regarded as a leading indicator of future job employment growth. Healthcare employment also surged sharply, perhaps a result of the passage of President Barack Obama's healthcare bill, which put paid to uncertainty on the issue. However information and financial services employment both declined, suggesting that the economy's previous growth dynamos are not yet humming.
More disquieting was a rise of 4,14,000 in the number of long-term unemployed - more than double the headline increase in employment. This may partly reflect a decline of 2,10,000 in the "discouraged" sector — it may even be a sign of recovery when the discouraged start seeking jobs again and become merely long-term unemployed.
Nevertheless even net of the "discouraged" the rise in long-term unemployment, which has more than doubled in the last year, indicates that even when recovery is running full blast it will be a long time before it is within reach of everybody. As in the 1930s (though to a lesser extent) this raises the possibility of a substantial residue of people whose skills have atrophied, and who are unable to find jobs.
The decline in hourly wages also suggests a structural change in the American economy that may not quickly reverse. With unemployment obstinately high and emerging markets competition fierce, the days of steady growth in living standards will only return stubbornly.
Nevertheless, on balance the news is good. The trend in employment is clearly for more of it -- and a further surge in unemployment to levels unprecedented since World War Two now looks unlikely. The "extended period" for which the Federal Reserve has pledged to hold rates at near-zero levels has almost certainly shortened.