At last, job market gives a good signal

CIBERsites is hiring computer programmers and analysts in Tampa, Fla., and Oklahoma City. Johnson Controls is looking for a branch manager in Great Falls, Mont. - one of 800 jobs it needs to fill nationally. And GroundMasters Inc. is looking for "motivated" people who can help mow lawns in Louisville, Ky.

Despite the relatively high price of energy - and worries that it was slowing the economy down - the demand for workers does not appear to be lessening. Instead, it appears that contractors erecting new office towers, companies providing professional services, and local governments, among others, are busy scheduling job interviews and adding to their payrolls.

This good news for the economy was confirmed last Friday when the Labor Department reported that the economy had created 274,000 jobs in April, much higher than had been expected. The widely watched unemployment rate remained unchanged at 5.2 percent. In addition, Americans worked more hours - the biggest jump since February 1997 - and wages perked up. This may presage better times ahead for retailers.

The improvement in the job market may indicate that the soft patch in the economy - as indicated by the slower growth in the gross domestic product for the first quarter - might be shorter or shallower than expected.

If the trend persists, the better job market could help the stock market, which has struggled in recent months as analysts have debated the future direction of the economy.

"The employment numbers bode well for the sustainability of the recovery," says Lynn Reaser, chief economist for the Investment Strategies Group at Bank of America in Boston. "The US economic engine still seems to be alive."

The resurgence of hiring, economists believe, would also validate the Federal Reserve's most recent rate hike of a quarter percentage point last Tuesday. "It probably means they can raise rates again when they meet on June 30," says John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C.

The improvement in the job market has come even while the US auto industry continues to suffer. Last week, Standard & Poor's lowered the rating on $453 billion of debt issued by General Motors and Ford to junk-bond status. This will probably mean that the Detroit duo has to pay more to borrow.

In the past, problems in Detroit would have rippled through the entire economy. In 1957 and in 1979-81, a slowdown in buying cars helped drive the US economy into a recession.

Now, that's not the case. "It highlights how the auto industry is no longer the dominant industry it once was," says Mark Zandi, chief economist at the Economy.com. However, he adds, the auto industry remains important to the industrial Midwest and particularly Michigan - a state he says is already in recession.

For the rest of the nation, though, the outlook is brighter. For example, Spherion Corp., a large staffing business based in Fort Lauderdale, Fla., reports that its clerical staffing is growing at 20 percent and its permanent placements are up 19 percent. "We think job formation in 2005 will be as good as 2004," says Roy Krause, president and CEO. "But we also see a little up-and-down rockiness even while it's still expanding."

One of the drivers of job growth is improved business confidence. That's what is happening at CIBER, which says its clients are now revamping some projects that had been on hold. This has given CIBER the confidence to start its own new project, says Tim Boehm, president of the company's CIBERsites division. It hopes to hire 1,000 computer programmers and systems analysts over the next 18 months to two years.

The company hopes that by locating in lower-cost areas, such as Tampa and Oklahoma City, it will be able to compete with offshore operations. "There are no additional telecom or travel costs," he says. "This will be an alternative to work shifted offshore."

Individuals looking for work are noticing the difference in the job market. For example, Joseph Yarak of Palo Alto, Calif., spent a year looking for a job. Within the past three months, he was hired as a product marketing manager by a company that designs and manufactures graphic cards for computers.

"In 2004, when I would go on the Internet and look for product marketing manager [positions], you'd find 10 to 15 jobs," he says. "Now, you find 300 to 350."

In addition, he says, employers in the Silicon Valley are more willing to hire people without a background that perfectly matches the requirements of the position.

Even those who have been unemployed longer term are finding better job prospects. That's the case with Brian McCullouch, who lost a job two years ago from the Port Arthur, Texas, Police Department.

"When you are applying for a job and your last employer tells them you have been terminated, a lot of people won't hire you," says Mr. McCullouch, whose dismissal from the police department is currently under arbitration.

Recently, he landed two jobs - one as a personal trainer at a health club and a second marketing cable TV subscriptions.

Such experiences are not isolated, says Mr. Krause: "Companies are actually adding to their workforce with permanent jobs."

• Robert Tuttle in New York contributed to this story.