U.S. Dec. Jobless Rate Holds at 4%; Business Adds
49,000 Jobs
By Siobhan Hughes
Washington, Jan. 5 (Bloomberg) -- The U.S. unemployment rate held at 4
percent in December, and businesses added the fewest workers in four months,
government figures showed today.
Companies created 49,000 jobs last month, after adding 111,000 in November,
the Labor Department said. Including government positions, the economy added
a total of 105,000 jobs in December after an increase of 59,000 the previous
month.
The number of new business jobs was the fewest since a 17,000 gain in August.
Manufacturing jobs fell for a fifth straight month and employment growth at
retailers slowed. Hours worked fell to the lowest level since January 1996, when
a blizzard paralyzed the Northeast.
The report validates this week's surprise cut in interest rates by Federal Reserve
policy-makers concerned the economy is weakening too rapidly. ``This slowing in
the economy is not just coming out of company earnings; it is shared by the
American worker,'' said Steven Wieting, an economist at Salomon Smith Barney
in New York, before the report.
For all of last year, unemployment averaged 4 percent, the lowest since it
averaged 3.5 percent in 1969. The jobless rate averaged 4.2 percent in 1999.
Last year, the economy added 1.9 million workers to their payrolls, compared
with 2.8 million in 1999 and 3 million in 1998. Job growth averaged 160,000 a
month, compared with 229,000 in 1999 and 251,000 in 1998.
Expectations
Analysts surveyed by Bloomberg News expected the unemployment rate to rise
to 4.1 percent and the economy to add 113,000 jobs after November's previously
reported gain of 94,000 jobs.
The slowing economy has so far had little effect on workers' salaries. Workers'
average hourly earnings rose 0.4 percent, or 5 cents, in December, after a 0.6
percent increase in November. Analysts had expected a 0.3 percent rise in
wages.
Average weekly hours worked fell to 34.1 in December from 34.3 in November.
Excluding the 1996 blizzard, hours worked were the lowest since April 1991,
when the economy was emerging from its last recession. Manufacturing overtime
dropped to 4 hours in December from 4.3 hours in November.
Instead of laying off qualified workers, companies are simply reducing hours
``since it was so hard hiring and retaining qualified help'' in the last several years,
said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd.
in New York.
Labor accounts for two-thirds of the cost of doing business, and the absence of
an acceleration in wages suggests companies are under less pressure to raise
prices.
Factory Jobs
Manufacturers -- which have cut production and idled plants -- shed 62,000 jobs
in December after a 15,000 loss a month earlier. Manufacturing in December
slumped to the lowest level since the last recession in 1991, according to an
industry survey by the National Association of Purchasing Management.
Cummins Inc., the largest maker of high-power diesel engines, said last month
that it was reducing its workforce by about 3.2 percent as North American
demand for heavy-duty declines. Slowing demand for cars is prompting job cuts
at automakers.
General Motors Corp., the world's largest automaker, said last month that it will
eliminate about 6,000 salaried and contract jobs and 4,000 hourly positions in
North America as it phases out the 103-year-old Oldsmobile brand.
At Ford Motor Co., plans to cut first-quarter North American production in
response to slow consumer demand will mean an idling of 20 assembly plants
this month, the company said Dec. 21. More than 45,000 workers in North
America will be affected.
Construction jobs decreased 13,000 in December after falling 7,000 as winter
weather across the country damped the need for workers.
Service Jobs
December services employment -- which includes government hiring -- rose
183,000 after increasing 82,000 a month earlier.
Retail employment rose 8,000 during the holiday shopping season, down from a
37,000 gain in November.
Retailers hired fewer workers in December than normal because of
slower-than-expected sales. ``A lot of the hiring for holidays probably just didn't
occur,'' said Steve Ricchiuto, chief economist at ABN Amro Inc. in New York.
The outlook for retail employment is dim. Sears, Roebuck & Co., the No. 1 U.S.
department-store chain, said yesterday it plans to slash about 2,400 jobs and
close 89 stores after December same-store sales fell.
Etoys Inc., an Internet retailer, said yesterday it plans to fire 700 of 1,000
employees after holiday sales fell short of forecasts. The number of firings in the
Internet industry has increased during the past year, with 10,459 workers being
let go last month, according to Challenger, Gray & Christmas, a private
job-placement firm.
December had the most announced job cuts for any month in seven years of
record keeping, according to the firm. Businesses said last month they would cut
133,713 jobs, led by 39,731 layoffs at retailers, said Challenger, Gray &
Christmas. Montgomery Ward & Co. compounded losses by saying it would
close all of its 250 stores and fire 28,000 people.
Consumer Spending
Those job cuts mirrored larger trends in the economy, especially a drop-off in
consumer spending and confidence. Retailers' sales at stores open at least a
year rose 0.7 percent in December, the worst holiday season since 1995, as
higher fuel prices, declining stock markets and winter storms curbed spending.
Employment at financial services firms rose 19,000 in December after rising
7,000 in November.
The percentage of the U.S. population holding jobs rose to 64.5 percent in
December from 64.3 percent in November.
The government's monthly job growth figures are based on statistics provided by
businesses, while the unemployment rate is based on a survey of U.S.
households. This month's report reflects revisions to unemployment data for the
past five years. |
