The Labor Department reported early Friday that 157,000 jobs were created in December, while the unemployment rate remained flat at 5.4 percent. It was a slight improvement from November's 137,000 jobs created, but far short of October's 312,000, and below Wall Street's expectation of a 175,000 increase.
"Jobs are being created, but the pace is nothing to write home about," said Joel Naroff, chief economist at Naroff Economic Advisors.
"This was one of those yawners for the markets," he added.
Certainly, share prices were little changed at the opening bell Friday following the release of the data, and in late morning trade, the Dow Jones industrial average is down 31.41 points at 10,591.47, while Nasdaq is 8.29 points lower at 2,081.71.
But while the pace of job creation has been less than robust, December marked the 16th consecutive month of people joining the workforce. During the twelve months of 2004, a total of 2.2 million new jobs were created, compared to a net loss of 61,000 jobs in 2003. Indeed, 2004 saw the strongest performance in the job market since 1999 when 3.2 million people found work.
The head of the Bureau of Labor Statistics, Kathleen Utgoff, pointed out that some of the most job-generating sectors in 2004 were education in healthcare, which combined created some 402,000 posts. The financial sector too saw solid gains, with a total of 140,000 jobs made in the year.
"Over the year, employment in financial activities was buoyed by continued strength in the housing market," Utgoff said, but also pointed out that real estate employment was "little changed."
Another major employer in 2004 was the government, both at the federal and local level. A total of 172,000 government positions were created last year, even as the postal service continued to shed jobs during the year.
Meanwhile, the manufacturing sector, which has lagged behind the overall economic recovery as companies tried to boost profits by keeping personnel costs low, increased the number of jobs available albeit at a measured level.
"For the first time since 1997, the number of factory jobs grew over a calendar year, up 76,000 in 2004," BLS's Utgoff said. But she added that most of the job growth among manufacturers was earlier in the year.
The measured pace of jobs growth is likely to be welcomed by the Federal Reserve, according to some analysts, who point out that slow and steady increase in employment would keep inflationary pressure at bay. That, in turn, would allow the U.S. economy to balance growth on the one hand while keeping inflation in check on the other. Indeed, in light of the latest employment report, most economists expect the Fed to continue raising interest rates when policymakers next meet Feb. 2.
"The (job) report should not create any irrational exuberance on the part of equity investors...and the members of the (Federal Market Open Market Committee) have to be satisfied with their course of action. The economy is decent enough to allow a continuation of the measured pace rate increase policy," said economist Naroff.
But while most analysts broadly agree that the United States needs to create about 120,000 jobs each month just to absorb all the new potential workers entering the market, so a 157,000 payroll increase in December was nothing to get worried about, others disagreed with that assessment.
To be sure, while the employment situation is improving, it still continues to fall short of what the Bush administration had initially promised.
The Economic Policy Institute, for one, pointed out that President Bush's tax cut package of July 2003 projected that the plan would create 5.5 million new jobs between June 2003 and December 2004.
"The Bush administration's jobs and growth tax cut fell 3.1 million jobs short of the 5.1 million jobs the administration projected would be generated over the last 18 months," the Economic Policy Institute's President Lawrence Mishel said.
"Although the administration claims the tax cuts are working, the actual job growth we've seen is far less than was expected with no tax cuts," he added.
For its part, the administration dismissed such arguments, and Treasury Secretary John Snow stated that "the president's economic leadership is clearly having a lasting effect, and we are reminded by (Friday's) report that it remains critically important to keep pro-growth policies like lower tax rates in place."
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