Post by Gorf on Jan 7, 2005 10:34:37 GMT -5
By JOHN O'NEIL (NY Times)
Published: January 7, 2005
The economy added 157,000 payroll jobs in December, the Labor Department said this morning, fewer than economists had been predicting, but an improvement over the economy's performance the month before.
The overall unemployment rate remained unchanged at 5.4 percent.
The figures for December come after two months of sharp swings in employment trends. For October, the Labor Department reported an increase of 337,000 jobs, a surge that far exceeded expectations. For November, the department had originally reported an anemic 112,000 jobs, but that figure was revised today up to 137,000.
Economists interviewed this morning called the December results positive and said they gave a picture of modest growth. But some of them expressed concern about figures indicating that the increase in jobs was not translating into increases in wages, which rose by .1 percent in December, rather than the .2 percent that had been forecast.
"It's a solid report," said Mark Zandi, chief economist at Economy.com. "There were just enough jobs to create just enough income to keep consumers spending and the economy moving forward."
But he said the sluggish rise in wages for a second straight month meant that the "very slow gains in employment are not enough to give workers any leverage in negotiations with their employers."
"That's good news for business - it means that profits should be strong - but not for the average American," he said. But he added that he expected wage growth to pick up later in the year.
Overall, the economy added 2.2 million jobs for 2004, according to the report, the best figure since 1999.
Today's figure means that the economy has edged close to the number of jobs that existed before the 2001 recession began, although the adult population has grown by about four million since then. The new figures are roughly equal to the number of new jobs needed to keep pace with the increase in the population. One notable area of weakness in the job market was in retail sales, which shed roughly 20,000 jobs.
Ian Shepherdson, chief United States economist for High Frequency Economics, wrote in an e-mail message to clients that the cuts "were presumably triggered by retailers' grim sales over the Thanskgiving weekend."
Richard Yamarone, chief economist at Argus Research, said he saw in the retail figures clear evidence of the encroachment of Internet sales on traditional stores. He noted that while sales forces were being cut, the number of temporary workers went up, an increase that he said probably included holiday hiring by UPS and other delivery services.
Mr. Yamarone said the message from the figures was,"We don't need you in the brick and mortar store, we need you to deliver the goods" being sold online.
The figures come on the heels of reports from retailers indicating a modestly positive holiday season. Retail sales rose 3.1 percent in sales compared to the year before, but only after many merchants marked down a substantial portion of their inventories just before Christmas.
Employment in manufacturing was roughly unchanged, while jobs rose in health care, professional and business services, wholesale trade and financial services.
Mr. Shepherdson also pointed to an increase of 36,000 in state and local government jobs. "Stronger tax revenues are financing big, sustainable gains," he wrote.
Economists were watching today's figures particularly closely for their potential impact on the Federal Reserve, which has been gradually raising interest rates as the economy has improved. Notes released this week from last month's closed-door meeting of its Federal Open Market Committee, which sets short-term interest rates, showed a greater level of concern about inflation than had been indicated in its public statements.
The committee last month raised short-term rates to 2.25 percent - up from 1 percent in June - and said it would continue to increase rates at a "measured pace."
The minutes, which are edited summaries of the committee's discussion, showed members raising concerns about whether higher oil prices may be becoming "embedded" in the economy even as the price of gasoline at the pump has dipped. They also expressed pessimism about whether there could be any quick turnaround in the United States' huge trade and financial deficit with the rest of the world, and whether the prolonged period of low interest rates had contributed to "excessive risking in financial markets" and "speculative demands" in housing.
Mr. Yamarone said that he thought the new figures would have "minimal" impact on the Fed.
And he said that while the growth in jobs was "encouraging," he was concerned by the number of recent announcements of plans for large corporate job cuts.
"We can't but think that those job cuts are going to be coming in the first quarter," he said.
Also today, a new report showed consumer confidence dipping slightly at the start of the year after rising in December. The A.P.-Ipsos consumer confidence index fell to 92.5 from 93.9, The Associated Press said.
Published: January 7, 2005
The economy added 157,000 payroll jobs in December, the Labor Department said this morning, fewer than economists had been predicting, but an improvement over the economy's performance the month before.
The overall unemployment rate remained unchanged at 5.4 percent.
The figures for December come after two months of sharp swings in employment trends. For October, the Labor Department reported an increase of 337,000 jobs, a surge that far exceeded expectations. For November, the department had originally reported an anemic 112,000 jobs, but that figure was revised today up to 137,000.
Economists interviewed this morning called the December results positive and said they gave a picture of modest growth. But some of them expressed concern about figures indicating that the increase in jobs was not translating into increases in wages, which rose by .1 percent in December, rather than the .2 percent that had been forecast.
"It's a solid report," said Mark Zandi, chief economist at Economy.com. "There were just enough jobs to create just enough income to keep consumers spending and the economy moving forward."
But he said the sluggish rise in wages for a second straight month meant that the "very slow gains in employment are not enough to give workers any leverage in negotiations with their employers."
"That's good news for business - it means that profits should be strong - but not for the average American," he said. But he added that he expected wage growth to pick up later in the year.
Overall, the economy added 2.2 million jobs for 2004, according to the report, the best figure since 1999.
Today's figure means that the economy has edged close to the number of jobs that existed before the 2001 recession began, although the adult population has grown by about four million since then. The new figures are roughly equal to the number of new jobs needed to keep pace with the increase in the population. One notable area of weakness in the job market was in retail sales, which shed roughly 20,000 jobs.
Ian Shepherdson, chief United States economist for High Frequency Economics, wrote in an e-mail message to clients that the cuts "were presumably triggered by retailers' grim sales over the Thanskgiving weekend."
Richard Yamarone, chief economist at Argus Research, said he saw in the retail figures clear evidence of the encroachment of Internet sales on traditional stores. He noted that while sales forces were being cut, the number of temporary workers went up, an increase that he said probably included holiday hiring by UPS and other delivery services.
Mr. Yamarone said the message from the figures was,"We don't need you in the brick and mortar store, we need you to deliver the goods" being sold online.
The figures come on the heels of reports from retailers indicating a modestly positive holiday season. Retail sales rose 3.1 percent in sales compared to the year before, but only after many merchants marked down a substantial portion of their inventories just before Christmas.
Employment in manufacturing was roughly unchanged, while jobs rose in health care, professional and business services, wholesale trade and financial services.
Mr. Shepherdson also pointed to an increase of 36,000 in state and local government jobs. "Stronger tax revenues are financing big, sustainable gains," he wrote.
Economists were watching today's figures particularly closely for their potential impact on the Federal Reserve, which has been gradually raising interest rates as the economy has improved. Notes released this week from last month's closed-door meeting of its Federal Open Market Committee, which sets short-term interest rates, showed a greater level of concern about inflation than had been indicated in its public statements.
The committee last month raised short-term rates to 2.25 percent - up from 1 percent in June - and said it would continue to increase rates at a "measured pace."
The minutes, which are edited summaries of the committee's discussion, showed members raising concerns about whether higher oil prices may be becoming "embedded" in the economy even as the price of gasoline at the pump has dipped. They also expressed pessimism about whether there could be any quick turnaround in the United States' huge trade and financial deficit with the rest of the world, and whether the prolonged period of low interest rates had contributed to "excessive risking in financial markets" and "speculative demands" in housing.
Mr. Yamarone said that he thought the new figures would have "minimal" impact on the Fed.
And he said that while the growth in jobs was "encouraging," he was concerned by the number of recent announcements of plans for large corporate job cuts.
"We can't but think that those job cuts are going to be coming in the first quarter," he said.
Also today, a new report showed consumer confidence dipping slightly at the start of the year after rising in December. The A.P.-Ipsos consumer confidence index fell to 92.5 from 93.9, The Associated Press said.