The nation’s job machine is showing it is indeed sturdy — generating new jobs despite two out-of-whack cogs in the gears of the economy.
There have been fears that the woes of those two — the housing and automotive industries — might spill over and gunk up the rest of the economy, stifling overall job creation and the economic expansion.
But a mostly positive report by the Labor Department on Friday eased those concerns and cheered Wall Street. The Dow Jones industrial average gained 29.08 points to close at 12,307.49.
Employers added 132,000 jobs to their payrolls last month, an improvement from the 79,000 generated in October.
Sharing in the gains were retailers, bars and restaurants, hotels and motels, health-care providers, financial firms, computer-design outfits and architectural and engineering companies. Their increases eclipsed job losses, mostly in construction and manufacturing.
“The economy may be slowing but the labor market is not falling apart,” said Joel Naroff, president of Naroff Economic Advisors. That’s especially comforting, he said, given that “manufacturing and construction continue to shed jobs like my cat sheds hair on a hot day.”
The unemployment rate crept up to 4.5 percent, which is still relatively low by historical standards. Feeling better about job prospects, people poured into the labor market looking for work last month, a factor that played a key role in pushing up the rate.
“The unemployment rate is low enough that it is enticing workers who had stepped out of the market to step back in,” said Mark Zandi, chief economist at Moody’s Economy.com.
The rate had declined to 4.4 percent in October, the best showing in five years.
Workers, many of whom have seen their paychecks whittled by inflation, saw wages pick up last month. Average hourly earnings rose to $16.94, a modest 0.2 percent increase from October. Over the past 12 months, wages have grown by 4.1 percent.
Increases in wages should support consumer spending, which in turn helps keep the economy afloat. But a rapid and sustained advance — if not blunted by other economic forces — can raise inflation concerns. That’s not good for the economy or workers’ pocketbooks because inflation can eat into everybody’s buying power.
Federal Reserve Chairman Ben Bernanke has said the central bank is keeping a close watch on wages for any signs of inflation.
On the political front, the new employment figures stirred fresh debate between Republicans and Democrats about the country’s economic health.
President Bush said the report “confirms the continued strength of the American economy. ... This is good news for American workers, and they are also seeing good news in their paychecks.”
But Sen. Jack Reed, D-R.I., countered that the “employment report is not strong enough to allay concerns that the economy is losing steam. If economic growth does not pick up soon, workers’ jobs may be at risk as well.”
A priority for the new Democratic-controlled Congress, which convenes in January, will be raising the federal minimum wage from $5.15 an hour to $7.25. The minimum has not been increased for nearly 10 years.
Americans, meanwhile, are giving Bush lower marks for his economic stewardship. The president’s approval rating on the economy sank to 38 percent in December, down from 43 percent in November, according to an AP-Ipsos poll.
Last month’s payroll gains exceeded forecasts that 105,000 new jobs would be created. For September and October combined, the economy ended up generating 42,000 more positions than the government previously had thought.
The jobless rate for blacks held steady at 8.6 percent, while the unemployment rate for Hispanics climbed to 4.9 percent from 4.7 percent in October. The unemployment rate for teenagers dipped to 15.1 percent from 15.4 percent.
Bulking up for the holiday season, retailers added 20,400 positions, the most in a year. Health-care providers expanded employment by 27,700. Professional and business services — a broad category including accountants, bookkeepers, computer designers, architects and engineers — added 43,000 jobs. Financial firms added 11,000 slots.
But pockets of pain were evident reflecting fallout related to the ailing housing and auto industries. Construction companies slashed 29,000 positions last month, the most in more than three years. Factories sliced jobs for the fifth month in a row.
The economy, which has been losing steam all year, slowed to a pace of 2.2 percent in the July-to-September quarter. Growth in the October-to-December quarter and into early next year also is expected to be sluggish.
Against this backdrop, the Federal Reserve, which had been steadily boosting interest rates for two years to thwart inflation, has left them alone since August. Many economists predict the Fed will keep its finger on the interest-rate pause button when it meets next Tuesday for its last session of the year.