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Turnaround may be at hand as jobless rate holds steady at 9.7%

WASHINGTON — At last, the unemployment crisis seems to be easing. That's the good news.

The bad news? Job creation remains scant because companies still lack enough confidence in the economy to ramp up hiring.

The U.S. jobless rate held steady at 9.7 percent in February. And employers cut 36,000 jobs — fewer than predicted. Those figures signaled that the job market is slowly healing.

Florida's unemployment rate stood at 11.8 percent in December. A delayed report showing January's numbers is expected out Wednesday.

Some economists said the jobless rate may have peaked and predicted the employment report for March will kick off a string of monthly job gains.

"We're on the cusp of some job growth, finally, finally," said Stuart Hoffman, chief economist at PNC Financial Services Group.

But there's a long way to go. The recession eliminated about 8.4 million jobs. The slow-motion recovery means hiring is expected to remain feeble for the rest of the year — at most a net gain averaging about 100,000 a month.

To reduce the jobless rate significantly, employers would need to create 200,000 to 300,000 jobs a month. But most of them are waiting to see stronger sales, more spending by consumers and businesses, and a more vigorous global rebound to stimulate demand for U.S. goods and services.

Some encouraging signs that consumers are more willing to spend emerged in reports earlier this week. Shoppers hit the malls and spent more freely in February. And activity in both the manufacturing and services industries of the economy is growing.

The jobs picture is gradually brightening at a time when the U.S. economic rebound is faring better than Europe's. The 16 nations that use the euro currency scarcely grew in the fourth quarter, scratching out a 0.1 percent gain. Spain is suffering from 18.8 percent unemployment.

Federal Reserve Chairman Ben Bernanke and most economists are forecasting only a modest rebound. That's why economists say it could take at least four years to restore the 8.4 million jobs wiped out by the worst recession since the 1930s. It could take even longer for the jobless rate to drop back down to a normal 5.5 to 6 percent.

Most economists had expected the unemployment rate to rise to 9.8 percent in February. In October, the rate hit 10.1 percent, a 26-year high. Some experts now think that might have marked the peak. Others note that if people who stopped looking for work resume their job searches, the rate could tick up.

In February, 1.2 million people abandoned their job searches — 473,000 more than did so in February a year ago.

All told, nearly 14.9 million Americans are now unemployed. That's nearly twice as many as when the recession began in December 2007.

Evidence of the fierce competition for jobs was seen in a rise in the so-called underemployment rate, which includes the unemployed, plus those who have given up looking for work and those who are working part time but would prefer to work full time. The underemployment rate rose to 16.8 percent, from 16.5 percent in January.

Labor Secretary Hilda Solis said Friday's report "shows positive signs that the economy is moving in the right direction." She credited President Barack Obama's economic policies but said, "We still have work to do."

Economists worry about how the economy — and job creation — will fare once the government's stimulus spending ends later this year. The odds are low that the economy will slip back into recession. But Bernanke and other economists will not rule it out.

Turnaround may be at hand as jobless rate holds steady at 9.7% 03/05/10 [Last modified: Friday, March 5, 2010 8:54pm]
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