Employers slow hiring pace heading into holiday season
AP Labor Writer
WASHINGTON (AP) – Employers slowed their hiring as they headed into the holiday shopping season, adding just 112,000 new jobs in November for the weakest gain in five months.
Still, the unemployment rate edged down, raising hopes that workers drawing paychecks will spend, spend, spend the rest of the year.
November’s 112,000 net increase in jobs, reported Friday by the Labor Department based on a survey of business payrolls, was the lowest since July. It was about half what economists had forecast, dampened by high oil prices and employers, especially retailers, still trying to do more with fewer workers.
“It’s not great job growth, but it’s decent,” said Joel Naroff, president of Naroff Economic Advisors. “It is decent enough to create income,” which should help boost holiday spending and keep the economy chugging.
November’s unemployment rate slipped to 5.4 percent, calculated from a separate survey of households. That was down 0.1 percentage point, as more people looking for work found jobs.
The department lowered job growth estimates from the previous two months by about 54,000, tempering October’s blockbuster showing of 337,000 to 303,000. Economists said the October job boom appeared artificially high, fueled by hurricane cleanup activity in Florida and the Southeast.
“We wondered how much of the October surge was just a rebound from the hurricanes,” said David Wyss, chief economist at Standard & Poor’s. “The numbers today would suggest more of it than we thought.”
On Wall Street, stocks edged higher Friday as another drop in oil prices overshadowed the weaker-than-expected report. The Dow Jones industrial average closed up seven points, and the Nasdaq gained four points.
About 150,000 new jobs must be added each month to keep up with population growth. Since August 2003, when employers resumed hiring after a long slump, job creation has averaged 152,000 jobs per month. Economists still expect hiring to pick up early next year to send the unemployment rate lower. The rate has held steady, within 0.1 percentage point, since July.
New hiring in the service sector fueled November’s overall jobs increase, led by health care, restaurants and hotels. Retailers lost jobs, their payrolls falling by a seasonally adjusted 16,200 last month.
“With the expansion showing strength and the holiday season upon us, I would have expected the retail sector to do more hiring,” said Bill Cheney, chief economist at John Hancock Financial Services. “Like last year, however, retailers appear to be trying to do far more with far less workers.”
Retailers’ declining payrolls preceded a disappointing start to the holiday shopping season. Merchants from across the sector reported sluggish November sales as the hopeful surge in Thanksgiving weekend business did not happen.
Consumer spending accounts for two-thirds of economic activity in the United States and is being watched closely, especially during this time of the year.
Worries about jobs and the economy helped push consumer confidence down in November for a fourth consecutive month. Faced with higher gas prices and grocery bills, some consumers are cutting back on clothing and other non-necessities. Though oil prices have fallen, and economists think the spike has depressed new hiring, they aren’t terribly alarmed.
“The recent job picture indicates that the holiday shopping season will be a decent, not a spectacular one,” said Sung Won Sohn, chief economist at Wells Fargo.
Manufacturing continued to shed jobs for a third consecutive month, with payrolls shrinking by 5,000. The nation’s factories, in a long slump, are struggling in the face of rising competition from lower-wage countries such as China.
In a broader look at the labor market, more than 2 million jobs have been created in the past year. Economists cautioned that the November report offers just a snapshot.
“I think we have to reserve judgment about what this report means for the economy as a whole,” Cheney said. “It’s weak enough to raise concerns, but not weak enough to prove anything bad.”
President Bush was criticized often during his re-election campaign for being the first president since the Great Depression to lose jobs on his watch. Now he has a second term to work with and is only 313,000 jobs short of closing that deficit.
“The economy is continuing to grow stronger with more than 2 million jobs created this year,” said spokesman Scott McClellan, who, along with some Cabinet members, credited Bush’s policies, including several rounds of tax cuts he wants made permanent, for the growth.
Democrats said job creation isn’t an administration priority. “We haven’t heard much about job creation since the election,” said Rep. Pete Stark of California, the top Democrat on the Joint Economic Committee. “Unless you’re qualified to be a cabinet secretary, you’ll probably find that job openings are still scarce.”
In November, the number of people holding more than one job rose by 346,000 to 7.6 million. About 8 million people were categorized as unemployed.
Economists still expect the Federal Reserve to raise a key interest rate by one-quarter percentage point to 2.25 percent at its Dec. 14 meeting, the final session of the year.