SalemNews.com, Salem, MA

Business

March 4, 2011

Improving economy raises hopes for better hiring

WASHINGTON — Economists are expecting a strong report on job growth in February, bolstered by news that fewer people sought unemployment benefits last week than in any week in nearly three years.

The sharp decline in applications for unemployment benefits, along with positive reports Thursday from retailers and the service industry, are the latest evidence that hiring will pick up this year.

Some analysts responded to the new data by raising their forecasts for how many jobs the economy created last month. The consensus is 175,000, but many economists are now estimating 200,000 or more, and they expect the pace to hold for the rest of the year. The government releases the February jobs report on Friday.

"All signs point to much stronger hiring," said Mark Zandi, chief economist at Moody's Analytics. "I think we finally have a prescription for a better job market."

A few economists are expecting the government to report that employers added as many as 300,000 jobs last month, although that's on the high end of forecasts.

January's figures were anemic — just 36,000 jobs added — partly because of severe winter storms that kept businesses closed. As much as a quarter of February's job gains could come from people returning to payrolls after the bad weather.

But most people pay more attention to the unemployment rate, which fell from 9.8 percent in November to 9 percent in January, the quickest decline in more than half a century.

Economists believe the rate edged up to 9.1 percent in February. Unemployment rates often rise when the economy improves and people who haven't been looking for jobs start hunting again. People who aren't looking are not counted as unemployed.

It would take up to 300,000 new jobs a month on a consistent basis to reduce the unemployment rate significantly, economists say. But few analysts — even those on the high end of February's forecast — think monthly job gains in the 300,000-plus range could be repeated month after month.

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