Economy recovering, but not accelerating
BY PAUL WISEMAN
WASHINGTON (AP) — The U.S. economy's recovery looks enduring. It's just not very strong.
Hiring, housing, consumer spending and manufacturing all appear to be improving, yet remain less than healthy. Economists surveyed by The Associated Press expect growth to pick up this year, though not enough to lower unemployment much.
A clearer picture of the nation's economic health will emerge Friday, when the government reveals how many jobs employers added in April.
"The outlook is for continued moderate growth," John Williams, president of the Federal Reserve Bank of San Francisco, said in a speech Thursday. "Nonetheless, we have nearly 4½ million fewer jobs today than five years ago, and the unemployment rate remains very high at 8.2 percent."
The 32 economists polled by the AP late last month are confident the economy has entered a "virtuous cycle" in which more hiring boosts consumer spending, which leads to further hiring and spending. They expect unemployment to drop from 8.2 percent in March to below 8 percent by Election Day.
But they still think the rate won't reach a historically normal level below 6 percent until 2015 or later. And they predict hiring will slow the rest of this year from a relatively brisk December-February pace.
The government's economic data have been sending mixed signals about the health of the recovery from the Great Recession. Here's a look at the economy's vital signs:
— JOBS
The job market is gradually improving, though not as fast as it had been. From December through February, employers added a strong 246,000 jobs a month. That figure sank to a weak 120,000 in March. The April jobs report could clarify whether March was a one-month dud — or evidence of a more lasting slowdown in job creation like the one that occurred in mid-2011.
The economists in the AP survey foresee average job growth of 177,000 a month from April through June and 189,000 for the next six months. The economy needs to generate about 125,000 jobs a month just to keep up with population growth.
On Thursday, the government said the number of people who applied for unemployment benefits last week fell by a sharper-than-expected 27,000 to a seasonally adjusted 365,000. That pointed to fewer layoffs and a brighter outlook for hiring.
Further cause for hope came in a government report Thursday on worker productivity: It fell from January through March by the most in a year. Declining productivity could be a positive sign for jobseekers. It may signal that companies are struggling to squeeze more from their workforces and must hire to keep up with customer orders.
— HOUSING
The housing market has been a dead weight on the economy. The single-family home market, in particular, is still struggling. House prices dropped for six straight months through February, according to the Standard & Poor's/Case-Shiller home-price index. And Americans bought fewer previously owned homes in March.
The economists polled by the AP worry that the lingering effects of the housing bust are slowing the economy's expansion. They say growth can't accelerate until national home prices finally hit bottom.
Still, spending on home construction and renovations rose from January through March by the most in nearly two years. And housing investment, led by apartment construction, is expected to contribute to economic growth this year for the first time since 2005.
The warm winter may also have led more people to buy earlier in the year, essentially stealing sales from March. Reduced prices, record-low mortgage rates, higher rents and the improving job market appear to be emboldening would-be buyers. Many seem to have concluded that prices won't drop much further, if at all.
And builders are laying plans to construct more homes in 2012 than at any other point in the past 3½ years.
— CONSUMERS
Americans have proved surprisingly willing to spend in the face of a wobbly economy. In the first three months of the year, consumer spending grew at an annual pace of 2.9 percent, the fastest in more than a year.
Some economists doubt that consumers can keep it up. They probably can't afford to. Americans' after-tax income in the first three months rose just 0.6 percent from a year earlier. That was the skimpiest pay increase in two years. People spent more, in part, because they saved less. Economists worry that people won't keep spending more unless their income grows.
On Thursday, big retailers including Costco, Macy's and Target, reported that sales last month came in below expectations.
— CORPORATE PROFITS
U.S. companies earned more money than analysts expected from January through March. They're beating Wall Street estimates at the best rate in more than a decade. Improved earnings have propelled the Dow Jones industrial average up nearly 4 percent since April 10.
U.S. corporations excluding banks and other financial firms are sitting on more than $2.2 trillion in cash, up from $1.7 trillion in 2009. That surplus means they can afford to expand and hire whenever they're confident enough.
— MANUFACTURING
Manufacturing has provided much of the fuel for the U.S. recovery since the recession ended roughly three years ago. American manufacturing expanded last month at the fastest pace in 10 months. New orders rose to the highest level in a year, a signal of more production in coming months. Export orders also rose, despite worries that weaker economies in Europe and China could hold back U.S. exports.
And the busier factories are hiring. Manufacturers added 120,000 jobs a month through March this year, their fastest three-month pace since 1997.
But the economists surveyed by the AP think manufacturers will fill jobs more slowly the rest of the year. If so, that could weaken overall job growth.
US hiring slows sharply
Employers only added 115,000 in April
BY CHRISTOPHER S. RUGABER
WASHINGTON (AP) — U.S. employers pulled back on hiring in April for the second straight month, evidence of an economy still growing only sluggishly. The unemployment rate dipped, but only because more people gave up looking for work.
The Labor Department said Friday that the economy added just 115,000 jobs in April. That's below March's upwardly revised 154,000 jobs and far fewer than the pace earlier this year.
The unemployment rate dropped to 8.1 percent last month from 8.2 percent in March. It has fallen a full percentage point since August to a three-year low. But last month's decline was not due to job growth. The government only counts people as unemployed if they are actively looking for work.
In April, the percentage of adults working or looking for work fell to the lowest level in more than 30 years. Many have become discouraged about their prospects. More than 5 million Americans have been unemployed for six months or longer, an astonishingly high number almost three years into a recovery.
Stock futures dipped after the report was released.
Employers added an average of 252,000 jobs per month from December through February, a burst of hiring that raised hopes the economy would accelerate. But job gains have averaged only 135,000 in the two months since then. That's below last year's pace of 164,000 per month.
Weak job gains pose a threat to President Barack Obama's reelection. He is likely to face voters this fall with the highest unemployment rate of any president since World War II.
Some economists attribute the weak gains partly to mild winter, which led some companies to accelerate hiring in January and February. That may have weakened hiring in March and April.
"Over the next couple of months we would expect the monthly gains to settle back into a 150,000 to 200,000 range," Paul Ashworth, an economist at Capital Economics, wrote in a note to clients.
But others are concerned that this reflects a genuine slowdown.
"One month can be weather related, two months of weaker than expected job growth is dangerously close to a trend," Dan Greenhaus, an analyst at BTIG, an institutional brokerage firm.
The slowdown could heighten fears that high gas prices and sluggish income growth are weighing on the broader economy.
Economists noted that the job gains are consistent with the 2.2 percent annual growth in the first three months of the year. Faster growth will be needed to accelerate hiring.
The economy must create at least 125,000 jobs a month just to keep pace with population growth. It generally takes twice that number on a consistent basis to rapidly lower the unemployment rate.
Average hourly wages rose a penny in April, to $23.38. They have increased 1.8 percent over the past year, trailing the rate of inflation.
Manufacturers, retailers, and hotels and restaurants all added workers. So did professional services such as engineering and information technology. Shipping and warehousing firms, construction companies, and governments cut jobs.
Hiring in February and March was revised up to show additional job gains of 53,000.
There have been other signs that hiring will improve.
The number of people seeking unemployment benefits fell last week by the most in a year, the government said Thursday. That drop wasn't reflected in the April employment report, which was compiled from a survey taken earlier in the month. But it could bode well for hiring in May.
And earlier this week, the Institute for Supply Management, a private trade group, said factory activity grew at the fastest pace in 10 months and a gauge of manufacturing employment showed that hiring jumped.
Still, service companies expanded in April at the slowest pace in four months, according to a separate ISM survey. And the group said hiring at those companies, which employ roughly 90 percent of the work force, slowed.
The economy expanded at a 2.2 percent annual rate in the January-March quarter, down from 3 percent growth in the fourth quarter. Economists polled by the Associated Press forecast the economy will grow 2.5 percent this year. In a healthy economy, that would be considered average. But faster growth is needed to spur greater job creation.
Supporting staff to become more resilient has to go beyond telling them to ‘pull themselves together’
By Stephen Bevan
There seems to be no end in sight to the gloomy economic outlook: growth stagnant, unemployment still growing, fear of job losses high and pressure on workers and families building. Business continuity – keeping on track when the firm is buffeted by external shocks – has become a major challenge.
'Resilience' is needed by individuals, organizations and indeed whole communities, if we are to meet these challenges.
There is a lot of press about resilience at the moment. People are invoking the spirit of the blitz, the old-fashioned 'stiff upper-lip' and the need to 'keep calm and carry on' in a period of national adversity. But there has to be more to resilience than stoicism. We need to think of what ordinary people in business can do - or be - to help them cope with adversity, setbacks and uncertainty. Doing so will allow them to do a good job.
Numerous theorists have attempted to define psychological resilience. All agree on one important thing: that it improves an individual's chances to compensate for the uncontrollable negative impact of pressure. The Latin origin of resilience, resilire, means to 'rebound' and our use of the term reflects this quality. For many, resilience is related to flexibility, being 'both the capacity to be bent without breaking and the capacity, once bent, to spring back', in the words of George Valliant, in The Wisdom of the Ego (Harvard University Press, 1993). Applied to the work environment, it is a preventive attribute that equips individuals or a team to anticipate stress and maintain mental wellbeing. One other characteristic of 'resilience' is the ability to build and sustain adaptive capacity. This is beneficial to future work situations: 'being resilient encapsulates the flexibility in adapting to and overcoming adversity, so that personal growth can occur' (Mary Gillespie, PhD thesis, Griffith University, 2007).
I have worried for some time that, by contrast, our use of the term 'stress' has moved beyond its original meaning and in some quarters become negatively associated with learned helplessness or else has been over-musicalized. It is true some are subject to intolerable pressures from a number of work and non-work sources that damage their mental wellbeing and may make them ill. Indeed, the latest forecasts from Age Concern suggest over 7 million people of working age in the UK will have a mental health condition by 2030. Despite this, I find it hard to accept that nothing more can be done to enhance a natural capacity for resilience and adaptability, which - though it resides in us all - can be difficult to deploy effectively in troubled times. Supporting people to become more resilient has to go beyond telling them to 'buck up' or 'pull themselves together'.
We know from research that the resilient tend to have a sense of humor and realistic optimism under stress. They are also better equipped to view problems as opportunities and to learn from mistakes or failures. We know less about whether resilient people or teams are more productive or innovative, whether resilience distinguishes great leaders from also-rans and whether it can (or should) be spotted early during induction. Crucially, we need to know more about how to sustain workforce resilience as a driver of both personal wellness and business continuity.
I am not convinced engagement alone will deliver high performance and smart productivity growth, without a concerted effort to understand, develop and exploit the latent capacity of UK workers to bounce back from adversity. We will need these qualities in spades when the recovery gathers momentum.