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New U.S. Job Numbers Call For Caution -- And Cautious Optimism

By John S. McClenahen Most economists expected no change in the number of U.S. jobs in February. Actually, nonfarm payroll employment rose 66,000, reports the U.S. Labor Department's Bureau of Labor Statistics. However, there's real danger in reading too much into this first payroll-employment increase in seven months. Bruce Steinberg, chief economist at Merrill Lynch & Co., New York, for example, believes that even as GDP accelerates in the months ahead, job gains will be slow to come because companies will continue to restructure their operations. What's more, Steinberg contends that the U.S. civilian unemployment rate is headed up to as much as 6% by midyear. February's decline to a 5.5% rate following January's fall to 5.6% from December's 5.8% is "quirky," he asserts. Faulty seasonal adjustment, he contends, is to blame. For the closely watched manufacturing sector of the U.S. economy, February offered a basis for cautious optimism, nevertheless. Although U.S. manufacturing continued to shed jobs -- some 50,000 -- that was about half the monthly rate of the past year. "While one month does not make a trend, the smaller decline in manufacturing employment is another positive sign that a recovery is beginning to form in manufacturing, albeit more slowly than in the overall economy," states David Huether, chief economist at the National Association of Manufacturers, Washington, D.C. "I believe that the lag in manufacturing employment will not be as great in 2002 as in the beginnings of earlier recoveries."

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