Stronger Recovery Will Reduce Jobless
AS the United States heads into winter, the job outlook is suddenly starting to take a turn for the better.
More companies are hiring after several years of corporate downsizing that reduced many payrolls to unworkably low levels. Research by the National Federation of Independent Business shows a small net increase in hiring during the second and third quarters, the first such gain for its members since 1990. Moreover, a relatively mild winter in many parts of North America - which is now the consensus of a number of meteorologists - should help labor-intensive industries such as construction.
``We are expecting the new unemployment figures that come out this week [Friday] to show a slight downturn,'' says Cynthia Latta, an economist with DRI/McGraw-Hill, an economic consulting firm in Lexington, Mass. Even if that is not true this month, she sees a falling unemployment rate for the longer term.
That is good news for millions of Americans either seeking work or worried about the stability of their own jobs. The US unemployment rate has been dropping steadily during the past year, from 7.5 percent in September of 1992 to 6.8 percent in October of 1993.
DRI/McGraw-Hill expects the rate to drop to 6.6 percent by the end of 1993. ``Consumer spending is proving to be much stronger than many people had thought,'' Ms. Latta says. ``Business inventories are also low. With consumer confidence now rising, we expect some rebuilding of inventories.''
US economic growth should be strong in the fourth quarter of 1993, at around 4 percent; then it should drop slightly to around 3 percent in the first quarter of 1994. But both quarters will help produce jobs while holding down unemployment, she says.
Latta is not alone in this forecast. Robert Eggert, who edits an economic newsletter from Sedona, Ariz., finds that the consensus of more than 50 economic forecasters is that average unemployment will dip to 6.8 percent for 1993 from 7.4 percent in 1992. The average rate should be down to 6.5 percent in 1994, 6.3 percent in 1995, and 6.2 percent in 1996, the economists say.
One reason for optimism is climbing consumer confidence. A new analysis by the investment house Merrill Lynch & Co. finds consumers more optimistic about their own financial well-being and that of the US economy than at any time since the euphoria of the post-election Holiday season a year ago. Merrill Lynch expects consumer spending to slacken early next year, since spending is currently outpacing household income.
Because of a change in the method of counting the jobless, Washington expects the unemployment rate to move up one-half a percentage point in January. Commencing Jan. 1, the Census Bureau and the US Department of Labor will use a revised questionnaire in the monthly survey of households. It will better measure whether women are working or seeking work.
Mitchell Fromstein, chairman of Manpower Inc., a placement company based in Milwaukee, says the US may be on the ``threshold of the brightest job outlook'' in four years. Manpower's latest quarterly survey of 15,000 employers found that the gap between those companies planning to hire workers and those companies planning to fire workers is wider than at any time in almost four years. Hiring companies now exceed firing companies by 13 percentage points. Many of the new jobs are expected to be in such high-wage companies as those making durable goods.