Hopes for a quick US economic rebound were dashed on Friday as data showed US employers cut 85,000 jobs last month while the unemployment rate held at 10 percent.
Analysts said the report highlighted a slow and painful recovery from recession, while US President Barack Obama said it shows “that the road to recovery is never straight.”
The Labor Department report on nonfarm payrolls was far worse than the consensus expectation for no change in overall employment levels.
The unemployment rate meanwhile was in line with expectations, remaining near its highest level since the 1980s, but also reflected a large number of people dropping out of the workforce.
In revising data for prior months, the data showed a net gain of 4,000 jobs in November instead of a loss of 11,000 previously reported, the first positive month after 22 months of losses.
Obama said the report highlights the need for more efforts to create jobs.
The figures “are a reminder that the road to recovery is never straight and that we have to continue to work every single day to get our economy moving again,” Obama said as he unveiled plans for tax credits for “green jobs.”
Still, he said the employment picture is better than when he began as president, when the economy was shedding some 700,000 jobs per month.
“The overall trend of job loss is still pointing in the right direction,” he said.
Economists said the news was disappointing but consistent with a gradually healing economy.
“We’re getting a steady but very slow improvement in the job market,” said Robert MacIntosh, economist at Eaton Vance. “We are going to have to get used to a frustratingly high unemployment rate.”
Cary Leahey, senior economist at the research firm Decision Economics, called the data consistent with a still-sluggish economy.
“The labor market is struggling and is stuck in the water,” he said. “You are seeing gains in output and manufacturing because of liquidation of inventories ... but we haven’t seen a decisive turn in the labor market.”
The world’s biggest economy expanded at a 2.2 percent pace in the third quarter after four quarters of decline in the worst recession in decades.
Most analysts expect continued growth for the fourth quarter and this year, but say recovery could be held back by unemployment, which hurts consumer spending and confidence.
“It is starting to look like those in the U-shaped recovery camp are in better shape than those in the V-shaped recovery camp,” said Ian Pollick, economics strategist at TD Securities. “While the worst of the recession is likely over, the fact that the duration of unemployment remains rigid is a concern, though a silver lining is that we are likely to see net job creation assisted by census hiring in the first quarter of 2010.”
The December report showed the goods-producing sector shed 81,000 jobs including 27,000 in manufacturing and 53,000 in construction.
The services sector lost a modest 4,000 jobs, with a loss of 10,000 in retail offset by gains in education, health care and professional services. Government sector employment fell by 21,000.
Average hours worked, sometimes seen as a proxy for economic activity, was unchanged last month. Average hourly earnings meanwhile rose 0.2 percent.
The civilian labor force fell by 661,000 in the month, suggesting that more people are stopping their search for employment.
“The unchanged unemployment rate of 10 percent understates labor market slack, since labor force participation fell sharply,” said Sophia Koropeckyj at Moody’s Economy.com. “Accordingly, the broader measure [of unemployment] increased to 17.3 percent,” she said.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS