The Wall Street Journal's Friday morning story about the January 6, 2006 Employment Report:
WSJ.com - U.S. Nonfarm Payrolls Grew By 108,000 Jobs Last Month: A WALL STREET JOURNAL ONLINE NEWS ROUNDUP:January 6, 2006 10:08 a.m.:
Hiring slowed down in December as U.S. employers were more cautious in taking on new workers as 2005 drew to a close. But job growth in prior months was stronger than initially thought, and the unemployment rate declined. The Labor Department said Friday that nonfarm payrolls climbed by 108,000 jobs last month -- about half of the 215,000-jobs gain that economists polled by Dow Jones Newswires and CNBC had been expecting, on average. However, the mild gain came atop a stronger foundation, as the November reading on payrolls was revised to show growth of 305,000 jobs during the month, instead of the earlier reported 215,000-jobs increase.
"The December payroll figure was sharply weaker than expected, but practically everything else was surprisingly strong," said Stephen Stanley, chief economist at RBS Greenwich Capital. "It appears to me that the unusually frigid weather during the survey period helped to dampen hiring."
The unemployment rate fell to 4.9% from 5.0% in November. There were 150.2 million workers in the U.S. labor force, with 7.4 million of those out of work. The average work week shrank six minutes to 33.7 hours. The average time the unemployed spent searching for work in December was 17.3 weeks, an improvement from the 17.6 weeks in November.
For all of 2005, the economy added around two million jobs -- about the same as last year. The unemployment rate averaged 5.1% last year, an improvement from the 5.5% average registered in 2004.
Average hourly earnings in December rose five cents to $16.34 -- a 3.1% increase in year-on-year terms and the fastest increase since February 2003. Economists have been watching wage data carefully in recent months for signs of increasing inflation. Peter Morici, a business professor at the University of Maryland, said Friday's data show "wages are advancing less rapidly that productivity, indicating that a tightening labor market poses little threat of igniting inflation."
Job losses in construction, retail and transportation during December helped to blunt job gains in manufacturing, professional and business services, education and health services, government and elsewhere.
December goods-producing hiring rose by 12,000 jobs. The manufacturing sector increased payrolls by 18,000 jobs, after an 8,000-job advance the month before. The construction sector cut 9,000 jobs last month. Service-providing employment went up by 96,000. Retail jobs fell by 16,000.
Joshua Shapiro, chief U.S. economist at MFR Inc. in New York, wrote in a note to clients that the weakness seen in retail hiring "could have been due to less than normal seasonal hiring in anticipation of a weak holiday selling season. If so, there would be less than normal layoffs in January, which would translate into strength on a seasonally adjusted basis. We'll see next month."
In an appearance on CNBC television, Treasury Secretary John Snow said there is further room for unemployment to drop, particularly if Congress votes to extend or make permanent the Bush administration's tax cuts. He noted that growth in productivity, combined with strength in the overall business environment, could allow companies to hire more workers and pay them more without feeling a need to significantly pass on costs.