The nation’s unemployment rate dropped to 5.7 percent in December to the lowest level in 14 months, but employers finished the year without many help wanted signs for the holidays, adding just 1,000 new jobs.
The 0.2 percentage point drop in the jobless rate occurred because fewer people were looking for work, the Labor Department said Friday. More than 300,000 people gave up their search for jobs and dropped out of the pool of available workers.
“The rate is going down, but it is going down for the wrong reasons,” said Bill Cheney, chief economist at John Hancock Financial Services, noting that it fell not because people were finding work. “That doesn’t make you feel really good about the state of the jobs market.”
Weak holiday hiring by retailers was to blame for holding back job gains. Analysts were surprised by the anemic job growth because they expecting companies to add 100,000 to 150,000 jobs to their payrolls last month. But the net gain was just 1,000 jobs — which is “quite shocking,” Cheney said. “I would certainly have not expected anything resembling that.”
Employment in the nation’s stores, malls and even gas stations dropped by 38,000, the report said, and manufacturing continued a 41-month slide by losing 26,000 jobs.
The nation’s factories have been on life support, and the sector shed about a half million jobs in 2003.
The economy has lost about 2.3 million jobs since President Bush took office, a statistic that Democrats hope to use against Bush as he seeks re-election.
“Rather than focusing on putting a person on the moon, I think the Bush administration should focus on putting people back to work,” said Rep. Rahm Emanuel, D-Ill., a former Clinton White House aide, citing Bush’s planned announcement next week of goals of sending Americans to Mars and establishing a permanent human presence on the moon.
The Bush administration contends that stronger economic growth — helped by the president’s three tax cuts — will eventually lead to more meaningful job creation on a sustained basis.
“The pace of December job growth reinforces the need to pass all the elements of the president’s plan for job creation,” said Commerce Secretary Don Evans. “President Bush won’t be satisfied until every American seeking work finds a job. Congress should make tax relief permanent and act with urgency on the rest of President Bush’s jobs and growth agenda.”
For that sustained growth, analysts are looking for monthly payroll gains of 200,000 to 300,000 — a mark the economy is far from reaching. December marked the fifth consecutive month of payroll gains, however slight.
Other areas of the economy are surging, but the jobs market has been a weak link in the recovery. To remain competitive in the global economy and out of concern that economic improvements wouldn’t last, companies have been hesitant to take on added costs of hiring new full-time workers. Instead, they have been working their employees longer and harder. Hence, the productivity of American workers has been at high levels in recent months.
But with all the positive signs in the rest of the economy, economists have been expecting the jobs market to improve.
“Most people were expecting it to be a reality by this stage, so it’s a little alarming we’re still relying on faith,” Cheney said.
Friday’s report showed that employers have added just 277,000 new jobs since July, cutting earlier estimates of growth in October and November.
Some areas of the economy added jobs last month. Employment continued to rise in the services sector in temporary employment services, education and health care. Construction companies also added to their payrolls.
But the cuts outweighed any gains. Analysts were concerned about the lack of employment growth for retailers in their most important month of the year. A rise in Internet shopping could partially explain why fewer stores were hiring, economists said.
The federal and state governments also reduced their payrolls last month, as did banks and mortgage companies, reflecting the uptick in mortgage interest rates.