Derek Grigsby of the Moratorium NOW! Coalition in Detroit speaks to the media at a demonstration against the termination of extended unemployment benefits by the U.S. Congress. Millions of displaced workers will be impacted. (Photo: Abayomi Azikiwe)
Originally uploaded by Pan-African News Wire File Photos
By SUDEEP REDDY
Wall Street Journal
A surprisingly weak jobs report cast a shadow over the economy,
undermining several weeks of positive data and diluting hopes of an
accelerating recovery.
U.S. employers added just 39,000 payroll jobs in November, a sharp
slowdown from the prior month, the Labor Department said. The
unemployment rate jumped to 9.8% from 9.6% in part due to more people joining the labor pool.
The report contradicted a recent string of optimistic data, from
retail sales to housing, leading many analysts to suggest the figures
could be a statistical aberration rather than the beginning of a
weakening labor market. Indeed, the government on Friday revised jobs data for September and October to show stronger numbers in those months, though the rise was still far too slow to improve the labor
picture substantially.
The latest figures underscore the fragility of the recovery more than
a year after the economy resumed growth. Employers, while no longer
cutting jobs on a large scale, remain cautious about substantial
hiring amid weak, albeit improving, consumer sentiment. Private-sector
employers added just 50,000 jobs last month, offsetting the 11,000
drop in government employment driven by local budget cuts.
The disappointing job report comes in the wake of a series of upbeat
indicators, including signs that consumers were boosting spending in
stores in the run-up to the holidays and a surging stock market.
Consumer sentiment—crucial in an economy where their spending accounts for 70% of demand—rose in November to its highest level since June. November auto sales jumped 17% from their year-earlier pace. In housing, an index of pending home sales surged more than 10% in October. Construction spending has increased for two months. Factory output and corporate profits continue to grow.
"The real world probably is not doing quite as poorly as these data
suggest," said Credit Suisse chief economist Neal Soss. "That is not
to say the reality is satisfactory."
The U.S. economy added far fewer jobs than expected in November while the unemployment rate rose to 9.8%, the highest since April,
underlining continued weakness in the labor market. Evan Newmark,
Dennis Berman, Steve Russolillo, Phil Izzo and Sudeep Reddy discuss.
The market rose slightly Friday, with the Dow rising 19.68 to
11382.09. Oil hit another 25-month high. This week, other strong data
and the anticipation of good jobs numbers pushed the Dow up nearly 300 points, to just below its high for the year.
Even Goldman Sachs economists, who have been among the most bearish forecasters in recent years, this week raised their projection for
2011 economic growth to 2.7% from 2% previously. But the firm still
expects the unemployment rate to remain high, ending 2012 at 8.5%,
following estimated growth of 3.6% that year.
"The economy is not sprinting, it's not walking, but it's crawling
forward," said Sam Geil, chief executive of Geil Enterprises, a
Fresno, Calif., firm that provides janitorial and security services.
His company, with about 450 workers, has seen activity picking up
since September and expanded payroll by 17 jobs last month. Mr. Geil
said he's noticed some people coming in as their unemployment benefits run dry. "It's the lower-paying jobs," Mr. Geil said. "We're not
adding at the higher level. We just don't have the need."
The numbers are likely to relieve some criticism of the Federal
Reserve's $600 billion bond-buying program, which central bank
officials launched last month amid worries about a prolonged period of
slow growth. The figures also increased the likelihood that Congress
would extend tax cuts and federal unemployment benefits that expired
this week, and perhaps consider new measures to boost growth, such as a payroll-tax holiday.
Rep. John Boehner (R., Ohio), the incoming House Speaker, said the
weak job growth was "clearly no match for the uncertainty families and
small businesses are facing, which is why we must cut spending and
stop all the looming tax hikes."
Austan Goolsbee, chairman of the White House Council of Economic
Advisers, said terminating unemployment benefits or not extending
middle-class tax cuts would "pull the rug out from under the nation's
recovery."
The figures illustrate a divergence between sectors of the economy.
Goods-producing sectors lost 15,000 jobs during the month due to
declines in construction and manufacturing.
M-Tek Inc. an Elgin, Ill., builder of food packaging systems, says
orders have been slow coming in. Rather than reduce its headcount of
30 employees, the company has shifted staff according to need, says
president Tom Liakopoulis.
Many service industries are seeing stronger activity and added 65,000
jobs overall in November. While the financial sector shed 9,000 jobs
and the retail sector dropped by 28,000, every other major category
saw an uptick.
Professional and business services gained 53,000 jobs; health care
added 23,000. The leisure and hospitality industry, such as hotels,
added about 11,000 jobs. W Austin hotel, which opens in Austin, Tex.,
next week, added 250 jobs last month, the bulk of the 315 it plans to
bring on.
In the Institute for Supply Management's services index released
Friday, the hotel and food sector showed the most strength for
business activity and new orders last month. The strength in service
firms "appears to be sustainable," said Anthony Nieves, who chairs the
non-manufacturing survey.
But with 15.1 million people classified as unemployed, and millions
more on the sidelines who have given up searching for work, the road
to finding a job remains bleak for many Americans. More than 6.3
million people in November had been out of work for six months or
more, up 100,000 from the prior month.
Joan Landry lost her job at a petrochemical engineering firm last
November, and she's found few openings near home in Needville, Tex., outside Houston.
Ms. Landry said she now receives $355 a week from a federal program
for extended jobless benefits that she spends "immediately" to pay
bills. Though her husband is still employed, Ms. Landry says she hopes Congress passes an extension of benefits. "We're just barely making it," said Ms. Landry, 59 years old.
—Justin Lahart and Sara Murray contributed to this article.
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