June 15, 2004

NEW YORK - U.S. companies are gearing up to create jobs at rates not seen since the height of the 1990s boom, a survey released Tuesday showed, adding to evidence that job growth will keep the U.S. economic recovery rolling.

Following two months of strong government payroll reports, the survey is a boon to President George W. Bush in the run-up to elections and will likely confirm expectations that the Federal Reserve will raise U.S. interest rates at the end of June as it moves to beat off emerging inflation.

Thirty percent of polled U.S. employers plan to add to their payrolls in the July to September period, the survey by Manpower Inc. showed. That is up from 20 percent a year earlier and 28 percent in the April to June period.

The survey hit its highest level of 35 percent in 2000, powered by the Internet-fueled boom.

The survey comes as job-growth begins to catch up with U.S. economic expansion, scotching talk of a 'jobless recovery' and bolstering Bush's claims that his policies create jobs, a key election battleground.

U.S. employers added a larger-than-expected 248,000 jobs in May, according to the Labor Department, following 346,000 in April and 353,000 in March. The 947,000 jobs created in the March-May period make it the strongest three-month stretch in four years.

The solid rate of job creation also makes it more likely that the Fed's policy-makers will ratchet up U.S. interest rates from current 1958 lows when they meet June 29-30.

The quick change in employers' outlooks comes as demand surges for products and services.

The percentage of companies that do not foresee changes in their workforce fell to 59 percent from 65 percent a year earlier and 62 percent in the second quarter. The percentage of employers intending to shrink their workforce fell to 6 percent from 9 percent in the year-earlier quarter, unchanged from the second quarter.

"If you look at the overall atmosphere, we still have geopolitical issues, we have an election year," Joerres said. "But companies are looking at their own business and saying, 'even with the noise I have to do something to expand my business."'

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