As the world economy shivers through a bad case of the chills, the U.S. economy steams on and on, as healthy as ever.
This was affirmed Friday as Wall Street joined with the nation’s job market to send a portrait of a hearty, consumer-driven economy where inflation is a mirage, and employers are still hiring.
After weeks of wandering aimlessly, stocks surged Friday, and the Dow Jones industrial average climbed 268.68 points, the index’s fifth-largest point gain for one day, to close at a record high 9736.08.
The explosive advance teamed up with Thursday’s strong performance to give the Dow its biggest two-day point spurt: 460.20, or a 5 percent advance.
The latest jobless data, more than any other factors, appeared to have set off the wave of optimism among traders.
A meager 0.1 percent rise last month in workers’ wages, despite the tight job market, indicated that inflationary pressures on the economy remain slim, and that assured many that the Federal Reserve is unlikely to boost interest rates to cool the economy.
Such a scenario was greatly appreciated by bond traders, who were the ones to ignite the day’s stock market rally.
“There was a growing sense of fear that the market was poised to move down on the back of rising interest rates,” said Stephen Roach, an economist with Morgan Stanley Co. in New York.
Instead, however, “there was a sigh of relief,” Roach said, that interest rates are unlikely to increase any time soon.
The government said Friday that employers put 275,000 new workers on their payrolls in February, a growth slightly ahead of most predictions. The jobless rate inched up only slightly, going to 4.4 percent last month, from 4.3 percent.
The nation’s jobless rate has hovered at 4.5 percent or below since April. Not since the late 1960s has the nation’s job market produced such upbeat figures, according to government officials.
“The real story is the job creation and number of hours worked,” said Robert Genetski, an economist with Chicago Capital Inc. “These numbers basically show that the economy is as strong as the fourth quarter, when it set that faster-than-expected pace” of 6.1 percent annual growth.
The average workweek grew by 0.2 hours, to 34.7 hours, in February, according to the government.
The construction industry, benefiting from mild weather in many parts of the country, saw its workforce grow by 72,000 jobs.
Another major gain was recorded by the retail trade industry, which added 123,000 jobs. Much of this growth took place at restaurants, clothing stores and department stores, where seasonal layoffs were lighter than unusual.
But Larry Mishell, an economist in Washington with the Economic Policy Institute, a liberal think tank, was not as encouraged by last month’s job growth, noting that many retail trade jobs are among the lowest-paying.
The latest figures also pointed out, however, that one cloud continues to haunt the economy.
The nation’s factories, feeling the pain of steeply slumping overseas demand and fierce competition at home in some markets, continue to shed jobs.
There was a net loss of 50,000 factory jobs last month, the largest monthly decline since November.
Since March 1998, blue-collar workers’ ranks have been trimmed back by 337,000 positions. Apparel workers, long-term victims of imported products, suffered a loss of 15,000 jobs last month.
With many U.S. manufacturers shifting their operations overseas, the apparel industry has lopped off 306,000 jobs since November 1991, according to the government.
Some economists were surprised by the one-month decline in factory jobs, because the latest report from the nation’s purchasing managers indicated an uptick in orders.
But the orders increase was not widespread across all of the major industry groups. An increase in factory orders is also likely to take several months to translate into job gains, experts noted.
Gordon Richards, an economist with the National Association of Manufacturers, suggested that a healthy economic trade-off is taking place between the slumping manufacturing industries and those that are booming.
And he pointed to the healthy situation of the technology, automobile and home furnishing industries as examples of the benefits that have come from heightened consumer spending.
“Basically, domestic demand has been so strong it is able to bridge over the world recession,” he said.
Outside of the nation’s factories, many experts considered the latest employment figures to be better news than they had expected.
Roach, for example, said that the upbeat jobless figures led his firm to make its third positive update in its forecast for the nation’s economy for the year.
But Michael Niemiri, an economist in New York with the Bank of Tokyo-Mitsubishi, said that the latest figures only confirm his long-held convictions about the good health of the U.S. economy.
“What changed?” he asked. “Nothing.”
