Central Banks

Friday, May 6, 2011 - 12:04

Fed's Dudley Q&A: Sees US Payroll Growth Accelerating 6-24 Mos

By Claudia Hirsch

NEW YORK (MNI) - The pace of U.S. job creation should accelerate
over the next six months to two years, New York Federal Reserve Bank
President William Dudley said Friday.

"We do expect payroll employment to continue to pick up speed over
the next six months, year to two years," Dudley told reporters following
a morning briefing on the regional economy. "That's something we've
wanted to see happen."

He declined to give a specific forecast on the unemployment rate,
which the Bureau of Labor Statistics reported earlier Friday had ticked
higher in April to 9.0% from 8.8% in March, even as the separate survey
of payrolls boasted a stronger-than-expected rise of 244,000.

"We've seen just in the last six months how volatile unemployment
rates can be," he said, pointing to specific factors like the labor
force participation rate, which can variously affect the jobless rate.

Dudley said job creation in the manufacturing sector is
particularly encouraging, including in Friday's report.

"Manufacturing job trends have actually been one of the bright
spots," he said, in an otherwise somewhat "disappointing" labor market

While some of manufacturing's vigor is due to inventory rebuilding
following the recession, he said, "I'm thinking there's something more
persistent going on here."

He described manufacturing productivity as "very, very strong,"
which has positioned the U.S. in a "pretty competitive" place in global

"There has been some evidence of manufacturing moving back to the
U.S.," Dudley said, and added that energetic economic growth elsewhere
in the world is supportive of U.S. manufacturing.

At the same time, better productivity and labor's eroding
bargaining position have probably limited overall U.S. job gains, he

Meanwhile, rising U.S. exports and competitiveness will play an
"important part" in "rebalancing the global economy," he said. Even now,
exports are helping to whittle down the nation's yawning international
trade gap, which Dudley said is necessary for "sustainable" U.S.
economic growth.

"We're actually seeing substantial improvement in the non-oil trade

Turning to commodity prices, Dudley noted ongoing volatility in
those markets, but reiterated the Fed's expectation that such "price
increases (will) turn out to be transitory."

"If they are, then inflation is not going to be a very big risk,"
he said.

"We want to be sure that inflation expectations remain anchored,"
Dudley reiterated, and added that currently, they are.

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