By Nell Henderson and Michael A. Fletcher
Washington Post Staff Writers
Saturday, December 3, 2005
U.S. job growth rebounded in November after stalling for two months, the Labor Department said yesterday, adding to other signs that the economy is expanding briskly despite the recent Gulf Coast hurricanes.
Builders, manufacturers, retailers, health care providers and other employers added 215,000 jobs last month, the biggest gain since July. The nation's unemployment rate held steady at 5 percent, the department said.
The report followed others that showed solid retail sales, factory orders and home sales since the hurricanes, together depicting an economy with plenty of momentum, analysts said. That contrasts with widespread worries right after the storms hit that higher energy prices would cause consumers and businesses to pull back sharply on spending and cause a serious slump.
"Employment growth is now back on track," said Nigel Gault, U.S. economist at Global Insight, a financial analysis firm. The economy "has been more resilient to . . . hurricanes and high energy prices than anyone imagined."
Stock prices were mixed yesterday after Federal Reserve Chairman Alan Greenspan noted the economy's health, reinforcing investor expectations that the central bank will keep raising interest rates in coming months to keep inflation under control.
"The U.S. economy has delivered a solid performance thus far in 2005," Greenspan said in a speech yesterday. "And, despite the disruptions of hurricanes Katrina, Rita and Wilma, economic activity appears to be expanding at a reasonably good pace as we head into 2006."
But Greenspan also warned that growing federal budget deficits threaten the economy in the long term because they could drain increasing amounts of resources from private investment "and cast an ever-larger shadow over the growth of living standards."
President Bush cited job gains, falling gasoline prices, rising consumer confidence, increasing business investment, relatively low unemployment and a strong housing market as evidence that the overall economy "is in good shape."
"Our economic horizon is as bright as it's been in a long time," he said.
Some economists noted less sunny economic signs, including rising poverty, declines in median household income in recent years and the fact that wages have risen more slowly than inflation over the past year, eroding the purchasing power of many households.
"A lot of economic indicators are up," said Jared Bernstein, senior economist at the Economic Policy Institute. "But there are a lot of people in the economy who are still down."
Energy prices shot up and consumer confidence plummeted immediately after Hurricane Katrina devastated parts of the Gulf Coast in late August. Hurricane Rita added to the destruction in late September. More than 560,000 people filed new claims for unemployment insurance benefits because of the two storms, the Labor Department said in a separate report Thursday.
But many employers across the country hired new workers in September and October, offsetting the number of jobs wiped out by the hurricanes. Meanwhile, oil and gasoline prices have receded to below the levels of late summer and consumer confidence has started to recover.
By November, employers across a broad range of industries were adding workers at about the same monthly rate as before the storms.
Some of the 37,000 jobs added last month in the construction industry reflected rebuilding and clean-up after Katrina, Rita and Hurricane Wilma, which struck Florida in October, Kathleen P. Utgoff, commissioner of labor statistics, said in a written statement.
Many other new construction jobs reflected the strong, though cooling, housing market, analysts said.
Employment growth also rebounded in some industries hit hard hit by the hurricanes. Restaurants and bars, which had lost jobs for two months, added 39,000 in November.
Unemployment varied among population groups. The rate among black workers rose to 10.6 percent last month from 9.1 percent in October. That was more than double the white unemployment rate, which edged down to 4.3 percent in November from 4.4 percent the month before. Latino unemployment rose to 6 percent from 5.8 percent.
Hourly wages for most workers rose 3.2 percent over the 12 months that ended in November, the fastest annual rate since March 2003, the Labor Department said. Some analysts said the gains may contribute to rising inflationary pressures.
Average weekly wages fell slightly for production and non-managerial workers, who account for more than 80 percent of the workforce, because they worked fewer hours overall.
"The economy looks better on paper than it feels to the overwhelming majority of consumers," said Diane Swonk, chief economist with Mesirow Financial.
The Labor Department doesn't track the pay for managers and executives, who make up 20 percent of the workforce, but other data indicate that their incomes have been growing smartly.
Much of the reason for the pay disparity, Swonk said, is the relatively lower demand for workers with less education and fewer skills. "Unless you're highly skilled and highly educated, you're not going to be paid much," she said.
Unemployment varied starkly by education level last month, as it has for years. The rate for workers without high school diplomas rose to 7.4 percent last month from 7.1 percent the month before -- more than triple the 2.3 percent rate in November for those with at least a bachelor's degree.
"This job market pays extremely well to people with college and graduate degrees," Swonk said. "This is a rich man's economy."