Falling energy prices have economists believing improvement is on the way for hiring, which has been mired in a hurricane-related lethargy...
WASHINGTON — Falling energy prices have economists believing improvement is on the way for hiring, which has been mired in a hurricane-related lethargy for the past few months.
When the government’s new snapshot of the nation’s employment climate is released next week, many economists are forecasting payrolls will have grown by more than 200,000 this month, a solid rebound from two dreary months.
The rationale behind this expected bounce back: Business people are in a better frame of mind and more inclined to step up hiring now that energy prices have retreated from record highs and the energy supply and transportation disruptions from the trio of Gulf Coast hurricanes are fading.
Brian Bethune, economist at Global Insight, is predicting the Labor Department’s monthly employment report out next week will show a gain of around 215,000 jobs this month.
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“We’ll have very solid overall job gains that will punctuate the start of more normal activity in terms of employment,” Bethune said.
While the overall economy has weathered fallout from the hurricanes well, the labor market has felt more deeply the devastation from the storms.
In September, employment declined for the first time in two years; in October payrolls grew by just 56,000 — a subpar performance. High energy prices — made worse by the hurricanes — was cited as a big factor.
Striking a more positive note about the situation going forward, Federal Reserve policy-makers at their Nov. 1 meeting said the hurricanes only “temporarily depressed” employment.
The Labor Department reported Wednesday that new applications filed for jobless benefits rose by 30,000 to 335,000 for the week ending Nov. 19. But even with the increase, the level of claims is well below October’s weekly average of 350,000.
“I think any number below 350,000 is associated with good job growth,” said Ken Mayland, president of ClearView Economics. “I think we are definitely getting back on track for fundamentally good job generation.”
Mayland is predicting the Dec. 2 unemployment report will show the economy added 250,000 jobs this month.
Katrina slammed into the Gulf Coast on Aug. 29. Rita barreled into the region Sept. 24. Those storms battered crucial oil and gas facilities, choked off commerce and destroyed businesses. Wilma, which hit Oct. 24, caused widespread power failures and property damage across Florida.
Hurricane-related job losses last week came to 21,000 — well below their peak in September. That brought to 582,400 the total number of layoffs related to Hurricanes Katrina, Rita and Wilma over the past 12 weeks.
Still, Bethune and other economists say business confidence is improving as energy prices ease. Oil prices briefly shot up past $70 a barrel in late August, and gasoline prices topped $3 a gallon. Oil prices settled at $58.71 a barrel Wednesday, while gasoline prices last week were averaging around $2.30 a gallon.
With energy prices easing and job growth expected to pick up, retail groups and economists are upgrading their forecasts for the holiday shopping season.
Even with the moderation in energy prices, though, the Federal Reserve is expected to raise interest rates again Dec. 13 to keep inflation under control.
But there is still reason to be guarded. Economists can’t always forecast a bull’s-eye. Last month’s job growth of 56,000 was about what half what economists had predicted.
Even if overall job growth improves, not all industries will reap the benefits. Car makers and manufacturers, in particular, are expected to continue to face challenges.