As Fed approaches rate hike, job growth shifts away from oil patch

Tue Jul 28, 2015 5:05am EDT
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By Howard Schneider

TULSA, Oklahoma (Reuters) - The rebound in U.S. jobs, limited in the early part of the recovery to a handful of booming industries such as oil, has broadened across the country as old-line industrial areas such as Michigan and sun belt hubs like Florida pick up the slack.

A Reuters analysis of state-level data shows recovery in jobs has been spreading across the country and industries, helping offset the reversal in fortunes in some oil patch states.

Riding the shale oil and gas boom, Texas, Louisiana, Oklahoma and three other states made an outsized contribution to the labor market, adding a fifth of all new jobs created between 2013 and 2014 before a year-long crude price slide pushed the industry into reverse.

But when Fed officials meet this week they can take heart from evidence that other states and industries are gaining momentum, whether it is the surge of new manufacturing jobs in Michigan, a construction boom in Florida, or a tech-driven rise in business service employment in California.

That is likely to keep the Fed moving toward an expected interest rate rise in September, satisfying one of Fed chair Janet Yellen's key criteria: a significant improvement in U.S. labor markets.

The Fed meets on Tuesday and Wednesday, and will release its policy statement on Wednesday afternoon. There will be no press conference or new economic projections in what will be the central bank's last meeting before the September session where a rate "lift-off" is expected.

Yellen cited market turmoil in China and Europe and a negative effect of a slide in energy prices on U.S. investment in recent testimony to Congress.

But she also been clear in her public remarks that she thinks a rate hike will be appropriate this year if the U.S. economy remains on its present path.   Continued...

The United States Federal Reserve Board building is shown in Washington October 28, 2014. REUTERS/Gary Cameron