Even if May shows strong growth in payrolls, most Americans still believe jobs are hard to come by.
June 3, 2004: 3:35 PM EDT
By Chris Isidore, CNN/Money senior writer
NEW YORK (CNN/Money) - If Friday's employment report comes in as strong as it's predicted, it will be the third straight month of solid job growth.
But it will probably be late summer -- at the earliest -- before the general public embraces the idea of a strong labor market.
The March and April reports showed the economy added a total of 625,000 jobs, handily beating forecasts in both months. Economists surveyed by Briefing.com forecast another 225,000 jobs being added in the May report. Reuters found estimates ranging from 140,000 jobs to 300,000 and even the lowest estimate would be better growth than seen in any month from 2001 through 2003.
But consumers are less willing to believe in the turnaround of the job market after that three-year slump. The latest consumer confidence survey by the Conference Board in May shows 30.6 percent believing that jobs are hard to find, almost twice as many as the 16.6 who believe jobs are plentiful.
Lynn Franco, director of the Conference Board's Consumer Research Center, said historically it takes a long period of strong job growth to turn consumers' view of the strength of the job market. Coming out of the last employment downturn, strong monthly jobs growth began showing up in late 1992, while the "jobs plentiful" response didn't beat out "jobs hard to find" until July 1995.
"They are aware it's improving," said Franco about current perceptions. "We are seeing signs that the reality is becoming the perception. But it's still only been two months of strong data."
Still, consumers' view about the strength of the job market is important for more than President Bush's re-election chances. The view of the job market is an important factor in consumer confidence overall. It can drive decisions on major purchases, such as homes, autos or major appliances and thus be an important factor in the strength of the economy.
The jobs number is also closely looked at by decision makers at the Federal Reserve. Investors believe another strong employment report will prompt the Fed to raise interest rates sooner rather than later -- likely at its June 30 meeting.
Job search experts say another part of the lag in perception is that people are right -- jobs are not yet "plentiful" despite a couple of months of strong jobs growth.
"You can't say plentiful, though I would definitely say improving," said Jeff Heath, president of Management Recruiters in New York. "Companies, because they've gotten so tight, are going out and hiring people. But they're being extremely cautious. It's not going to be 1999."
Comparisons to hiring boon
Part of the problem in turning around perceptions is that most people remember the white-hot market for employment in the late 1990s and early 2000. This was when the unemployment rate fell to under 4 percent, most months saw between 200,000 to 400,000 jobs added and employers where scrambling to find people to hire.
Views of the job market remained strong even as job losses started piling up throughout 2001. It wasn't until November 2001 that more people believed jobs were hard to find than plentiful.
"If people perceive that all-time high as 'normal,' that's going to make it very difficult to convince them that jobs are plentiful," said John Silvia, chief economist at Wachovia, who predicts that between 240,000 to 280,000 jobs were created in May. Silvia said that while economists and many investors focus on the jobs added or lost number, most members of the general public only are aware of the unemployment rate. And the unemployment rate can be a lagging indicator on the strength of the employment market because of the way it is calculated.
Silvia forecasts that job growth will continue to top 200,000 throughout the rest of this year and perceptions will begin to change in late summer. Franco sees attitudes changing late in the year if growth remains strong.
"It wouldn't shock me if it's not until early next year, but we're definitely on the way there," she said.
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