Average Wages and Job Growth – PLUS – Falling Trade Deficit

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Hourly Wages Increase on Average

WASHINGTON (AP) - The unemployment rate dipped to 4.5 percent and workers got fatter paychecks in February, even as bad winter weather sent a bit of a chill through U.S. job growth.

The latest employment picture, released by the Labor Department on Friday, suggested employers are holding up well and opportunities continue for jobseekers as the economy deals with a sluggish spell, a housing slump and troubles in the automotive industry.

Employers - both private companies and the government - added a total of 97,000 new jobs to their payrolls in February, the fewest in two years. Lousy winter weather was blamed for much of the slower job growth.

Construction companies - already feeling the strain of the ailing housing market - slashed 62,000 jobs in February, the most in 16 years, as nasty weather hit many parts of the country.

Meanwhile, factories, coping with slowing economic conditions at home and intense competition from abroad, continued to cut jobs. They eliminated 14,000 positions last month.

Those job losses, however, were eclipsed by employment gains elsewhere including at health care facilities, financial companies, computer-design firms, bars and restaurants, retailers and the government.

"The job market remains relatively healthy. The weather certainly delivered a lashing to the job market in February, particularly in the construction business as snow, ice, and sleet hammered parts of the country," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "Still, companies cautiously have the hiring mats out and workers are making more money."

The drop in the unemployment rate from 4.6 percent in January came as people left the work force in February. Economists said bad weather made it difficult for people to get out and look for jobs. Taking those factors into account, February's jobless rate, the lowest since December, still should ease any fears that the economy could be headed for a worse-than-anticipated slowdown in growth, analysts said.

On another encouraging note, the economy ended up adding 55,000 more jobs in December and January combined than the government estimated a month ago.

Workers' wages grew briskly, another sign that the job market is in fundamentally good shape, analysts said.

Average hourly earnings jumped to $17.16 in February, from $16.49 a year earlier. That represented a solid 4.1 percent increase over the last 12 months.

US Trade Deficit Shrinks

The US trade deficit narrowed 3.8 percent in January to 59.1 billion dollars thanks to record-breaking export growth, the Commerce Department said Friday.

It was a bigger drop than expected on Wall Street, where analysts saw a deficit of 60.0 billion dollars, and marked the steepest change in the trade figure since October.

An improving trade picture could be good for first-quarter US economic growth, as a higher deficit subtracts from gross domestic product.

Total imports fell 0.5 percent to 185.8 billion dollars last month while exports jumped 1.1 percent to a new record of 126.7 billion.

US exports of capital goods grew by 1.0 billion dollars from December to January, consumer goods increased 500 million and foods, feeds and beverages went up 300 million.

But America's politically sensitive deficit with China surged 12 percent to 21.3 billion dollars, with US consumers as hungry as ever for cheap Chinese products.

The US deficit with the European Union slumped 28 percent to 6.5 billion dollars, while the shortfall with Canada grew 23 percent to 6.9 billion.

Overall, the United States imported fewer vehicles, parts and engines (down 1.5 billion dollars) and consumer goods (down by 1.4 billion) in January from December.

Exports of vehicles and parts also fell, by 700 million dollars, reflecting a deep restructuring underway in the biggest US automakers -- General Motors and Ford.