The Unemployment Rate Increased from 4.7% in November to 5.0% in December
The bad news about the economy continues to roll in. A big concern for many is that the consumer will continue spending as long as they have jobs. The job market has been shaky since summer and now it is beginning to decline with an increase of the unemployment rate from 4.7% in November to 5.0% in December. The original press release is from the BLS. This is worth a read because it is just the numbers so you can interpret them yourself. The article below is from the Market Watch.
The nation's unemployment rate shot up to 5% in December as job growth stalled, a sign that the labor market is stressed as the U.S. economic slump spreads.
U.S. seasonally adjusted nonfarm payrolls rose by 18,000 in December, the weakest job growth since August 2003, according to a survey of thousands of businesses, the Labor Department reported Friday. . . . . Private-sector payrolls fell by 13,000, the first decline in more than four years. . . . . A separate survey of households showed employment plunging by 436,000, marking the biggest decline in five years. The number of unemployed adults rose by 474,000, pushing the unemployment rate up to 5% from 4.7%. The jobless rate had been under 5% for 25 consecutive months.
The jobless rate has risen 0.6 percentage points since March. "When unemployment rises by more than 0.5% from its cycle low a recession generally ensues," wrote Robert Brusca of FAO Economics.
The weak jobs report puts more pressure on the Federal Reserve to act aggressively to prevent a recession. Earlier in the week, the prescient Institute for Supply Management manufacturing index fell below the break-even 50% mark, dropping to a nearly four-year low. (See post below.)
"The risk stemming from this is that consumers who face debt constraints may not see income growth as strong in coming months," wrote Stephen Gallagher, U.S. economist for Societe Generale. For the Federal Reserve, however, the need to continue offering support to the markets and the economy only grows.
Goods-producing industries cut 75,000 jobs in December, including 49,000 in construction and 31,000 in manufacturing.
Construction jobs have fallen by 236,000 since September 2006. Manufacturing industries tied to construction accounted for about 30% of the jobs lost in the factory sector in 2007.
Services-producing industries added 93,000 jobs. Government added 31,000, including 25,000 in education.
Professional and business services added 43,000 jobs. Retail industries cut 24,000 jobs; since March, the retail sector has lost 34,000 jobs. Education and health-care added 44,000 jobs.
Of 278 industries, 48.4% were hiring in December, the first month since September 2003 that fewer than half of industries were adding jobs. Of 84 manufacturing industries, just 31.5% were hiring in December.