(COMTEX) B: Unemployment lowest in 30 years
B: Unemployment lowest in 30 years
WASHINGTON, Feb. 4 (UPI) -- The Labor Department reported Friday that
U.S. employers intensified their hiring frenzy in January, offering the
largest wage increase in four months while creating 387,000 non-farm
payroll jobs.
The gain in non-farm payrolls followed a revised rise of 316,000 in
December, which the government originally reported as increasing by 315,
000.
The nation's unemployment rate slipped to 4.0 percent from 4.1
percent -- its lowest level in 30 years.
Labor also reported labor costs, a key measure of wage inflationary
pressures in the workplace, rose 0.4 percent -- the largest increase in
four months, and following a similar 0.4 percent rise in December.
The average work week rose 6 minutes to 34.6 during the month, Labor
said.
Most economists on Wall Street were expecting the economy to add only
250,000 jobs and the unemployment rate to ease to 4.0 percent.
Economists were also expecting the average hourly earnings to increase
by only 0.3 percent.
Experts said the report is likely to fuel market concerns that the
risk of inflation is growing.
Labor said the gain in non-farm payrolls, which was the biggest gain
in more than two years, contributed to the increase in average hourly
earnings.
Margaret Kudarauskas, senior market analyst at IRF Thomson Financial,
said, "The pace at which the U.S. jobs market is tightening is likely
to bolster market expectations that the Fed is likely to act vigorously
this year to defuse the threat of inflation."
The Federal Reserve raised its key funds rate a quarter percentage
point to 5.75 percent on Wednesday and signaled that it is inclined to
do so again in the next few months.
The Fed has been warning for a year that the country's rapid economic
growth -- 5.8 percent in the last three months of 1999 -- is shrinking
the pool of available workers willing to take jobs and building up
inflationary pressures as a result.
"The unemployment rate, as a result, has become a key indicator of
the likely direction of Fed interest-rate policy," Kudarauskas said.
Experts noted that according to economic theory, inflation tends to
accelerate when the unemployment rate falls below 5 percent.
The U.S. unemployment rate, however, has been below 5 percent for 30
months without igniting inflation.
In its latest report, Labor attributed most of the increase in
payrolls in January to gains in the services-producing industry, which
added 256,000 jobs.
That included a 43,000 gain in retail trade, down from a 79,000
increase in December. Department stores, however, lost 33,000 jobs in
January, reversing a gain in December.
Labor said the construction industry recorded the biggest monthly
payroll gain since February 1984 -- an increase of 116,000, which the
government attributed to unusually warm weather in January.
Manufacturing payrolls rose 13,000 in January after a 6,000 decline
in December, marking the second increase in three months, Labor said.
Analysts noted non-farm payrolls may have been boosted in January
because the U.S. government started hiring for the 2000 census. The
Census Bureau needs at least 500,000 new employees by April to help
carry out its population count, which started Jan. 20 in Unalakleet,
Alaska.
While the goal is to hire 500,000 people for temporary jobs, there
are 860,000 openings.
For all of 1999, companies added 2.7 million workers to their
payrolls, averaging 224,000 a month. In 1998, 2.9 million new jobs were
created, or about 244,000 a month.
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Copyright 2000 by United Press International.
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