Unemployment in U.S. Falls to 8.5 percent as Jobs Gain
Friday, January 06, 2012
Unemployment in U.S. Falls to 8.5 percent as Jobs
Gain
By Timothy R. Homan, Bloomberg
U.S. employers added more workers to payrolls than forecast in
December and the jobless rate declined to an almost three-year low,
showing that the labor market gained momentum heading into
2012.
The 200,000 increase followed a revised 100,000 rise in November
that was smaller than first estimated, Labor Department figures
showed in Washington. The
median projection in a Bloomberg News survey called for a December
gain of 155,000. The unemployment rate unexpectedly fell to 8.5
percent, the lowest since February 2009, while hours worked and
earnings climbed.
Sustained payroll gains are needed to chip away at joblessness
and support household spending, which accounts for about 70 percent
of the world's largest economy. The labor market figures follow
recent data showing increased manufacturing and a rebound in
consumer sentiment that show the U.S. is weathering Europe's debt
crisis.
"The tide is beginning to come back in," James
Glassman, senior economist at JP Morgan Chase & Co. in New York, said in
a radio interview on "Bloomberg Surveillance" with Tom Keene and Ken
Prewitt. "We've got a long way to go. This is all positive, though,
that we're actually moving forward, and that's an important
trend."
Stock-index futures extended gains after the report, with the
contract on the Standard & Poor's 500 Index expiring in March
climbing 0.5 percent to 1,279.2 at 8:47 a.m. in New York. The yield
on the benchmark 10-year Treasury note rose to 2.01 percent from 2
percent late yesterday.
Last Year
Employers added 1.64 million workers in 2011, the best year for
the American worker since 2006, after a 940,000 increase in 2010.
Even with the gains, little headway has been made in recovering the
8.75 million jobs lost as a result of the recession that ended in
June 2009.
Bloomberg survey estimates of 86 economists for December ranged
from increases of 80,000 to 220,000. Regular monthly revisions to
prior reports subtracted a total of 8,000 jobs to payrolls in
October and November.
The unemployment
rate, derived from a separate survey of households, was
forecast to climb to 8.7 percent, according to the survey median.
The decrease in the jobless rate from a revised 8.7 percent in
November reflected a decline in unemployment combined with a gain
in Americans saying they were employed. The labor force was
little changed.
Annual Revisions
Annual benchmark revisions to the household survey showed the
unemployment rate averaged 8.9 percent in 2011, down from 9.6
percent and 9.3 percent in the previous two years. It still marked
the worst three-year period since 1939 to 1941.
The labor participation rate held at 64 percent in December,
today's report showed.
Private hiring, which excludes government agencies, rose 212,000
after a revised gain of 120,000 in November. It was projected to
climb by 178,000, the survey showed.
Factory payrolls (USMMMNCH) increased by
23,000, the strongest since July, after a 1,000 gain in the
previous month. Manufacturing job growth last year was the
strongest since 1997.
Employment at service-providers increased 152,000, with a 50,200
advance in the transportation
industry that includes companies such as FedEx Corp. (FDX) and United Parcel Service Inc. (UPS) Retail trade
payrolls climbed 27,900 in December as companies kept hiring for
the holiday
shopping season.
Construction Payrolls
Construction companies added 17,000 workers last month.
Government payrolls decreased by 12,000 in December, reflecting
cuts at the local government level.
Average hourly earnings rose 0.2 percent to $23.24, today's
report showed. The average work week for all workers increased to
34.4 hours.
The so-called underemployment rate -- which includes part- time
workers who'd prefer a full-time position and people who want work
but have given up looking -- decreased to 15.2 percent from 15.6
percent.
The report also showed a decrease in long-term unemployed
Americans. The number of people unemployed for 27 weeks or more
fell as a percentage of all jobless, to 42.5 percent from 43.1
percent.
"Sales are robust, merchandise margins are strong, operating
margins are growing," Alexander Smith, chief executive officer of
Fort Worth,
Texas-based Pier 1 Imports Inc., said on a Dec. 15 conference call
with analysts. "There's going to be a little more hiring in the
first part of the year without a doubt."
Holiday Sales
Other companies also saw increased demand last month during the
holiday shopping season. Same-store sales at U.S. retailers
excluding Wal-Mart Stores Inc. rose 3.5 percent in December from a
year earlier, according to figures yesterday from the
International Council of Shopping Centers.
In the final three months of 2011, "clear signs emerged that
U.S. consumers are more confident and that other underpinnings of
our economy are either stable or slowly improving," Don Johnson,
vice president of U.S. sales for General Motors Co. (GM), said on a Jan. 4
conference call.
Faster job gains than those generated in 2011 may be needed to
reduce unemployment. That's one reason policy makers remain
concerned.
"While indicators point to some improvement in overall labor
market conditions, the unemployment rate remains elevated," Federal
Reserve Chairman Ben S.
Bernanke and other members of the Federal
Open Market Committee said in a statement at the conclusion of
a meeting last month in Washington.