Suddenly, The Job Engine Is Purring

If you still think the economy is jobless and recession-prone, it's time to wake up and smell the data. The invigorating aroma of the May employment report alone ought to be enough to change your mind.

U.S. businesses added 209,000 workers to their payrolls in May, following a 216,000 increase in April. The economy hasn't posted back-to-back job gains of that size in more than three years. The unemployment rate dipped from 7% in April to 6.9% in May, the lowest in a year and half. And the workweek jumped from 34.4 hours to 34.8 hours, the longest in four years.

Still skeptical? Consider this: The Labor Dept.'s annual revisions show that the economy generated 336,000 more jobs from April, 1992, to February, 1993, than previously reported (chart). In the aggregate, payroll employment has now recovered all of its recession losses.

The job data force a sea change of attitudes about prospects for economic growth in the second quarter--and beyond. After a dismal 0.9% advance in first-quarter real gross domestic product, the April and May gains in employment and the workweek are consistent with real GDP growth of at least 3%.

In fact, so far in 1993, job gains are averaging 182,000 a month, up substantially from 104,000 a month during the second half of 1992. Although job growth remains below that of a typical expansion, it is strong enough to suggest that the economy is able to sustain a 3% growth trend through yearend.