Financial Times FT.com

US jobs return to heart of campaign

By Joshua Chaffin in New Yorkand Andrew Balls and Christopher Swann in Washington

Published: September 3 2004 13:44 | Last updated: September 3 2004 13:44

President George W. Bush on Friday rode a wave of enthusiasm unleashed by his New York nomination as Democrats tried to change the focus to another modest employment report.

The 144,000 increase in jobs last month, compared with 73,000 in July, was an improvement on the very weak data of the previous two months but short of the 150,000 figure economists estimate are needed monthly to keep pace with population growth.

Just hours after he made the Reaganesque pledge to delegates on Thursday night to build a “more hopeful America”, Mr Bush promoted his record in the war on terror at a rally in Scranton, Pennsylvania, and was later due to visit the swing states of Iowa and Wisconsin.

The Republican camp was buoyed by a poll of likely voters that gave the president an 11-point lead over John Kerry, his challenger, apparently breaking a long deadlock between the two candidates.

The Time magazine poll, which questioned voters during the final three-days of the four-day convention, showed Mr Bush with 52 per cent support, with 41 per cent for Mr Kerry and 3 per cent for Ralph Nader, running as an independent.

Mr Kerry, touring Ohio, a swing state hit by the decline of manufacturing, attacked the lacklustre rate of job creation, saying: “At the rate that this administration is creating jobs, you're not going to have a net plus-one job in the state of Ohio until the year 2011.”

He also rejected criticism made against him during this week's convention, saying he would not have his commitment to defend the country “questioned by those who refused to serve when they could have and by those who have misled the nation into Iraq”.

Of the 144,000 new jobs, 22,000 were in the embattled manufacturing sector. Since January 107,000 jobs have been created in manufacturing. But about 2.7m jobs have been lost in the sector since Mr Bush took office in January 2001.

Average earnings have failed to keep pace with inflation; in the year to August earnings rose by 2.3 per cent while headline inflation rose by 3 per cent in the year to July.

The waning influence of mortgage refinancing and tax cuts means economists are concerned that spending may remain sluggish.

Jobs growth has slowed significantly from the rapid pace of the spring, as economic growth has slowed, due in part to higher energy prices.

Republican strategists are likely to take comfort in a slight fall in the unemployment rate to 5.4 per cent and an upward revision to job creation in July. Nevertheless, Mr Bush is still on track to become the first leader since the Great Depression to preside over a net loss of jobs during his term in office. Overall, 913,000 jobs have been lost under Mr Bush.

Gregory Mankiw, chairman of the White House Council of Economic Advisers, said: “Growth moderated in the second quarter from earlier in the year and that is reflected in the employment reports. But GDP is rising, employment is growing and the economy is heading in the right direction.”

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