Sun, Dec 05, 2004 - Page 11 News List

US job growth weaker than expected

HIRING Three years after the last US recession ended in November 2001, the rebound in jobs remains slower than in any previous economic recovery since World War II


The US economy added 112,000 payroll jobs last month, far fewer than the month before and not enough to keep up with average increases in the adult population, the US Labor Department reported on Friday.

The gain was well below Wall Street forecasts, and employment in manufacturing remained flat for the third month in a row.

The modest pace of job creation, along with a small decline in the number of hours worked, reinforced the image of an economy that is expanding more slowly and in which companies remain skittish about hiring more people.

Many analysts were stunned last month when the government reported a spectacular jump of 337,000 jobs in October. But on Friday, many said that last month's jump was mostly an aberration from the more enduring trend of slow growth in jobs and wages.

The report cast a shadow on expectations for holiday spending this year, given that consumers face higher gasoline and heating prices without much rise in real personal income.

Three years after the last recession officially ended in November 2001, the rebound in jobs remains slower now than in any previous economic recovery since World War II.

Unemployment inched down by 0.1 percent last month, to 5.4 percent, but the US still has at least 200,000 fewer jobs than it did before the recession began. At the same time, the adult population has grown by about 4 million.

"The economy is adding jobs, but not at a feverish pace," said Richard Yamarone, chief economist at Argus Research, an economic research firm in New York. "Economic growth is not expanding at a pace that can engender stellar job growth, and I think you have to get used to these kinds of numbers."

The biggest areas of hiring last month were at financial companies and in health services like nursing and home health care. But retailers, who had been a primary source of lower-paying jobs, actually shed 16,000 positions last month and have essentially done no net hiring since July.

Manufacturers, who have shed more than 2.5 million jobs over the last four years, added no additional workers for the fourth consecutive month.

The biggest weakness among manufacturers was among computer and electronics companies, which have been stymied by an unexpected sluggishness of corporate spending on information technology. Computer companies dropped 3,800 jobs last month and total employment in that sector is exactly even compared with one year ago.

Most analysts said the economy was still poised for moderate employment growth over the next year.

So far this year, the economy has added about 2 million jobs, an average pace of about 185,000 jobs a month.

Economists estimate that the US needs to generate about 150,000 jobs a month to keep up with the increase in population, which means that employment is keeping slightly ahead of job seekers.

"Available data suggest the recovery remains surprisingly resilient, despite concerns about energy costs," wrote Robert DiClemente, a senior economist at Citigroup. "Gains in employment of 185,000 per month suggest an expansion proceeding at cruising speed."

Month-to-month changes in payroll employment are notoriously volatile and defy consensus forecasts on Wall Street more often than not.

On Friday, the US Labor Department revised down its October estimate to 303,000 jobs from 337,000. But analysts said even that number was exaggerated by special events and statistical issues.

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