BUREAU OF LABOR STATISTICS, DAILY REPORT, MONDAY, JANUARY 7, 2002l The unemployment rate increased 0.2 percentage point to 5.8 percent in December, the Bureau of Labor Statistics announced. U.S. payrolls declined by 124,000 in December and have dropped by 1.1 million in the final 4 months of 2001. Manufacturing continued to suffer the heaviest job losses, followed by air transportation, retail trade, and help supply. However, the losses were offset by employment gains in services and government, BLS said. The December job losses follow declines that averaged about 400,000 a month in October and November, suggesting signs that a recovery is in sight. However, payroll employment has fallen 1.4 million since the recession began in March. "The manufacturing sector was in recession 6 months prior to the rest of the economy," said National Association of Manufacturers President Jerry Jasinowski. "Today's report indicates that the current industrial downturn continued in December, as manufacturing employment declined by 133,000 last month to a little over 17 million. The job losses in manufacturing continue to mirror the investment-led nature of the current downturn: roughly three-quarters of the decline in manufacturing employment last month was in durable goods, mainly industrial equipment, electronics and transportation equipment (Daily Labor Report, page AA-1).
The nation's labor markets continued to weaken last month as the jobless rate rose to 5.8 percent, the highest level in nearly 7 years. But there were also signs in the report yesterday from the Labor Department that the economy's decline is slowing and could end soon, says John M. Berry, writing in The Washington Post (page E1). The recession has done plenty of damage. During 2001, the unemployment rate rose 1.8 percentage points, with almost half the increase coming after the September 11 terrorist attacks. The total number of people without jobs who were looking for one increased to 8.3 million from 5.7 million in December 2000. And the jobless rate for blacks was in double-digits last month for the first time in 4 years, at 10.2 percent, almost double the rate for whites. Among industries by far the hardest hit last year was manufacturing. The unemployment rate continued to creep upward last month, though fewer Americans lost their jobs than in any of the previous 3 months. The Labor Department reported yesterday that the economy lost 124,000 jobs in December, the smallest decline since August. The unemployment rate rose two-tenths of a percentage point to 5.8 percent, a level it last reached in April 1995. Economists said the numbers suggested the job market might be stabilizing after severe cutbacks caused by the terrorist attacks and by the recession. The also said they saw other promising signs, like a rise in the number of hours worked per week in manufacturing, and a wave of hiring in education and health care (Daniel Altman, The New York Times, page B1). Today, at a conference at the Atlanta Federal Reserve Bank, two leading experts in the field of productivity will present a research paper arguing that strength in the field of productivity is likely to continue for a while. The work by Dale Jorgenson of Harvard University and Kevin Stiroh of the New York Federal Reserve Bank says that the likely scenario for productivity growth over the next decade remains a robust 2.24 percent annually. That's just a tad lower than the average 2.36 that helped the economy surge from 1995 to 2000. "The U.S. productivity revival remains largely intact," the two say in their paper, which was written along with Mun S. Ho of the think-tank Resources for the Future in Washington, D.C. If they're right, there are important consequences for wages, interest rates, and growth. When productivity rises, employers can pay higher wages because they are producing more with less. The Federal Reserve doesn't have to fret about inflation, because output grows without straining resources. Ultimately, that builds a bigger economic pie. The paper puts the long-run noninflationary growth rate of the economy -- the so-called speed limit -- at 3.34 percent over the next decade, about a percentage point higher than what economists believed was possible before the productivity surge. However, the figure represents a sharp reduction from the average annual growth rate of 4.6 percent from 1995 through 2000, with the main difference being a reduction in the growth of hours worked (The Wall Street Journal column "The Outlook", page 1). In The Wall Street Journal's feature "Tracking the Economy," Import Prices for December, to be released Thursday, are expected to change -0.6 percent according to Consensus Global Forecast, in contrast to the previous actual change of -1.6 percent. The Producer Price Index for December, to be released Friday, is expected to make an -0.2 percent change, in comparison to the -0.6 percent actual change for November. The Producer Price Index Excluding Food and Energy for December is expected to increase 0.1 percent, according to the Consensus Global Forecast. In November the change was 0.2 percent. The U.S. nonmanufaturing sector accelerated its pace of business activity in December, compared with November, according to the Institute for Supply Management, formerly known as the National Association of Purchasing Management. The Institute said its nonmanufacturing business activity index stood at 54.2 percent in December, up 2.9 percentage points from the month before. The December index level -- the highest reading in a year -- indicated a somewhat faster expansion in the U.S. business sector outside of manufacturing (Daily Labor Report, page A-3). The recession that started in March is gradually intruding on people's lives, forcing them to cut back in ways that contribute to the downturn, writes Louis Uchitelle in The New York Times (page 1). Young people just out of college find themselves unable to land jobs in their chosen careers, or to afford rent for their first homes. Retirees try to get by on suddenly shrunken incomes. Immigrants send less money to relatives back home, or cut their own expenses. And a growing number of middle income people having lost jobs or bonuses or raises squeeze luxury out of their lives. But as the number of Americans untouched by recession is diminishing, optimism is not. The expectation of most forecasters -- that the economy will be rising by June -- is shared by many Americans who see their new hardships as temporary and therefore bearable. The poor, meanwhile, who suffer in good times as well as bad, seem less affected than higher income people. Unemployment has barely risen in the past year among people who make less than $20,000, the Labor Department reports (The New York Times, page A1).
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