U.S. Economy: Jobless Claims Point to a Strong Labor Market
Voltaire:
Just the way I like it.
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(Bloomberg via CNET)
Bloomberg News
December 10, 1998, 11:27 a.m. PT
U.S. Economy: Jobless Claims Point to a Strong Labor Market
Washington, Dec. 10 (Bloomberg) -- The number of workers
applying for unemployment benefits last week held at a level that
suggests the latest round of corporate job cuts is being offset
by hiring at small businesses and service companies.
First-time jobless claims rose by 1,000 to 314,000 in the
week ended Dec. 5, the Labor Department said. The four-week
average for claims -- which evens out the sometimes volatile
weekly numbers -- fell to 316,750, the lowest level in a month.
The numbers show the U.S. labor market has stamina in the
eighth year of the current expansion. ''There has been a modest
increase in the rate of job losses, but claims remain at a level
consistent with strong gains in payroll employment,'' said Ian
Shepherdson, chief U.S. economist at High Frequency Economics in
Valhalla, New York.
Announcements of job cuts have little immediate impact on
job statistics for several reasons, analysts said. The cuts don't
go into effect right away, and often big companies hire for some
divisions while paring back others.
Smaller companies created 80 percent of the 17 million jobs
added in the last six years, according to the Small Business
Administration. And they're picking up some of the slack. ''Small
business aren't only holding their own, they're growing much more
quickly than large businesses,'' said the SBA's Anita Drummond.
''They're actually in a job squeeze because there are more
positions available for skilled workers than there are
individuals in the market looking for jobs,'' she said.
That was reinforced by the latest survey of the National
Federation of Independent Business. A record 32 percent of the
1,636 firms surveyed had job openings in October, said William
Dunkelberg, the NFIB's chief economist. Small businesses
typically are defined as those with fewer than 500 workers.
Falling Inventories
Overall, U.S. companies added 267,000 jobs in November, and
monthly job growth has averaged 226,000 so far this year -- even
as manufacturers cut 245,000 positions from their payrolls since
March. Increased hiring by retailers, restaurants and other
service-producing firms boosted November payrolls and more than
offset a 47,000 decline in manufacturing jobs. Builders also
added jobs last month.
While companies keep adding to their work forces, however,
there are signs the economy's pace of growth is slowing from the
3.7 percent annual rate posted for the first three quarters of
this year. A separate report showed U.S. wholesale inventories
fell in October, the first drop in three months, as the value of
stocks of paper, farm products and petroleum declined.
Wholesale inventories fell 0.2 percent to $283.4 billion in
October after rising 1.3 percent in September, the Commerce
Department reported. Wholesale inventories account for just under
a third of all U.S. stocks; factory and retail inventories
account for the rest. Sales at wholesalers fell 0.4 percent to
$213.0 billion in October, after rising 1.0 percent in September.
Slow Growth, Low Inflation
In financial markets, bonds gained on expectations that
slower growth would help hold inflation in check. The Treasury's
benchmark 30-year bond rose 1/2 point, pushing down its yield
more than 3 basis points to 4.95 percent, the lowest in two
months. Stocks declined, led by Merck & Co. and consumer goods
makers such as Minnesota Mining & Manufacturing Co., on concerns
about earnings. The Dow Jones Industrial Average fell 102 points,
or 1.13 percent, the index's second drop in two days.
The number of planned job cuts by U.S. businesses has surged
this year, rising 9.3 percent in November from November of last
year, according to a monthly survey by Chicago employment firm
Challenger, Gray and Christmas.
The annual total of planned dismissals is on track for the
largest number of planned cuts in five years because ''we could
see more pre-Christmas job-cutting'' as companies complete their
1999 budgets, said John Challenger, the firm's chief executive
officer. So far in 1998, U.S. businesses have announced plans to
cut 574,629 jobs, about 40,000 behind 1993's total of 615,189 --
the peak number for this decade.
Job Cuts Surge
In the last two weeks, companies ranging from Boeing Co. to
Johnson & Johnson have announced layoffs. Boeing, the world's
largest airplane maker, said it would fire 48,000 workers through
the year 2000. And Johnson & Johnson, the world's fifth-largest
drugmaker, said it would cut 4,100 jobs.
This week, Lear Corp., Northrop Grumman Corp., Amerada Hess
Corp. and Liz Claiborne Inc. announced job cuts. In addition,
Corporate Express Inc., a Broomfield, Colorado-based office
product supplier, said it would cut 1,700 jobs as demand for its
goods slumps.
Many of those displaced workers may find jobs elsewhere. The
NFIB's survey showed that 21 percent of the companies surveyed
said finding qualified workers was the most pressing issue they
faced.
Highlighting the labor market's strength, unemployment fell
to 4.4 percent last month -- just above the 28-year low of 4.3
percent reached in April and May -- and the percentage of the
U.S. population holding jobs rose to 64.1 percent, close to an
all-time high of 64.2 percent reached earlier this year.
''Labor markets remained tight in nearly all districts'' in
recent weeks, the Federal Reserve reported yesterday in its
latest regional economic report card.
Today's reported increase in jobless claims was close to
analyst expectations of a 2,000 rise. Jobless claims rose to
313,000 in the previous week.
At the same time, the number of workers remaining on the
jobless benefit rolls fell by 66,000 to 2.217 million in the week
ended Nov. 28. Also that week, 13 states or territories reported
an increase in new jobless claims, while 39 states said new
claims fell.
Also, the insured unemployment rate fell to 1.8 percent from
1.9 percent. The insured unemployment rate measures the number of
people receiving benefits divided by the number of workers
covered by the program.
--Laura Cohn, Vince Golle and Monee Fields-White in Washington
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