Sunday, April 8, 2012

What recovery? Mild winter has falsely inflating employment numbers, say economists

The unseasonably mild winter kept the mercury high, but could have inflated something else as well – the economy.

Cities like New York, Detroit, Chicago, and Minneapolis saw some of their warmest winters on the books, but the relatively balmy temperatures weren’t all good news.

The warm weather likely gave a false boost to the sluggish job market, which had been showing surprising strength since December.

Even as the unemployment rate fell to a three-year low of 8.2 per cent, job growth slowed to 120,000 last month, the Labour Department said on Friday, the smallest increase since October.

That was less than half the average monthly increase in the prior three months and way below the lowest estimate in a Reuters survey.

Economists had expected an increase of 203,000 and the jobless rate to hold at 8.3 per cent.

The report was also closely watched in political circles. If employers retreat on hiring, consumers could lose confidence in the economy and potentially dim President Barack Obama's re-election hopes.

A warm January and February allowed construction companies and other businesses that work outdoors to hire workers a few weeks earlier than usual, effectively stealing jobs from March. It helps explain a 7,000 drop in construction jobs. Read More