Human Capital & Careers

Employment Figures Tell a Tale of Growth

In 2002 and 2003, corporate chieftains were afraid to hire. "Now they're out of the cave," says Lehman Brothers' chief economist, "but not exactly ...
Helen ShawJanuary 6, 2006

Although U.S. employment grew more slowly than expected in December, jobs-related data just issued by the U.S. Department of Labor reveal a solid growth story, according to some economists.

December nonfarm payrolls rose by 108,000, with professional and business services, food services, health care, and manufacturing among the sectors that added jobs. The overall figure, however, was a good deal shy of the 200,000 forecast made by a bevy of economists surveyed by Bloomberg News and way less than November’s rise of 305,000 (revised upward from an original figure of 215,000).

But the volatility of employment data that’s normal in a year’s final months tends to mean that focusing on a single month’s numbers is less than meaningful, suggests Ethan Harris, chief U.S. economist at Lehman Brothers.

Considered over the long term, the employment report indicates a return to a solid trend. “In 2002 and 2003, the corporate sector was in hibernation and scared of its own shadow with so many shocks: the governance scandals, the Iraq war and other risky things,” said Harris. “Now they’re out of the cave, but not exactly jumping up and down.”

Indeed, the time for partying hasn’t yet arrived. “There continues to be some caution on business spending,” observes Diane Dercher, senior vice president and chief economist at Waddell & Reed. Productivity has resulted from getting more out of current workers as well as some solid employment growth, she says.

Further, the jobless rate has held remarkably steady remaining in a range between 4.9 percent and 5.1 percent since March. Last month, the unemployment rate dipped to 4.9 percent from 5.0 percent the previous month, according to the DOL.

Steady, too, were overall employment rates. Total employment of 142.8 million for December was little changed over November’s employment total of 142.6 million. The labor force participation rate of 66 percent remained the same over the year.

Both Dercher and Harris note there is some murkiness in the numbers because November’s employment figures were revised upward and the effects of Hurricane Katrina are still uncertain. The government report also included data on individuals who evacuated their homes, whether temporarily or not, as a result of Hurricane Katrina, and were living in households throughout the country as of December. (It did not include data on people living in hotels or shelters.)

About 1.1 million people aged 16 and over had evacuated because of the hurricane, and about 600,000 evacuees had returned to their previous homes, according to information gathered by the DOL in December. Of all the evacuees, 58.2 percent were part of the labor force, and the unemployment rate (including only those actively seeking work) was 12.4 percent. The unemployment rate for evacuees who had not returned home was 20.7 percent; it was 5.6 percent for those who had returned.