Jobs forecast sees more 'help wanted' signs across US

In Huntsville, Ala., a defense contractor is looking for computer whizzes who can help the company simulate weapons systems. A hospital in Corpus Christi, Texas, will be hiring 30 to 40 doctors and another 250 nurses, technicians, and clerks to back up the new MDs. And in San Francisco an online auto insurance company plans to double its 550-person workforce next year and will be looking for claims adjusters and customer-service specialists.

These are just some of the "hot" employment areas where job applicants will find someone to read their résumés. And these companies are far from alone: According to economists and employment analysts, the job picture will be brighter next year. Already, job bulletin boards like craigslist.com are seeing an uptick in postings, with some cities experiencing significant jumps over last year.

Expectations are for the unemployment rate to fall from the current 5.4 percent to as low as 5 percent. More important, the economy could be creating up to 225,000 new jobs each month, more than enough to absorb the 125,000 workers who enter the labor force each month.

"It may be the best year since 2000 in terms of the general job market," predicts Mark Zandi of Economy.com. "There will rising labor force participation and fewer underemployed."

An improving labor market is a critical element in the economic picture. To date, consumer spending and housing have led the recovery. Now, however, housing is starting to slow as higher mortgage interest rates and much higher home prices start to create some friction.

Although consumers continue to buy, savings rates have plunged to near zero - an economic factor that may presage some consumer pullback. Thus the new workers will help to take up some of the slack. "New jobs create income and without new jobs we can't increase spending so it's really the key to economic growth," says Sung Won Sohn, chief economist at Wells Fargo Banks in Minneapolis.

As new jobs are created, consumers take note. "Historically there is a strong correlation between employment and consumer confidence," says Mr. Sohn.

There are a variety of reasons behind the more optimistic view. Business is flush with cash and is expected to look for creative ways to use it. In the recent past this usually meant buying a piece of machinery to increase productivity. While that trend is likely to continue, it will be ameliorated by the expiration of the government's accelerated depreciation benefit.

"This made it cheaper to buy equipment than hire people," says Mr. Zandi.

At the same time, many American companies have slowed or stopped their downsizing. "Each year downsizing is dropping off about 20 percent," says John Challenger whose firm in Chicago, Challenger, Gray & Christmas, keeps track of announced layoffs.

Mr. Challenger says executives are no longer managing "from underneath a rock," that is, worried that the economy is going to falter at any moment. "There is more willingness to invest for the longer term."

It hasn't hurt that energy prices have fallen or stabilized, he says, adding that if there are changes in such forces as rising healthcare costs, fragile global politics, and the large budget deficit, "it could create some strong momentum for the economy and job growth."

However, no one expects a return to the 1990s when companies added workers just to make sure they had a strong bench, anticipating that new orders would develop. "Jobs are only going to come as they are needed, this is not an era where companies will create jobs willy-nilly," says Challenger.

In fact, even as the job market blooms, advocates for the jobless see a less bright picture. They point to the 3.3 million working families who exhausted their unemployment benefits in the first 11 months of 2004. At the same time, the long-term unemployment rate (the percentage of jobless out of work for six months or more) is more than 20 percent of all jobless workers for 26 months in a row, according to the National Employment Law Project.

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