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It's the economy, stupid.
More bad news for the GOP wannabe's:
ECONOMIC REPORT Jobless rate jumps to 5% as payroll growth stalls December nonfarm payrolls rise 18,000, weakest gain in more than four years By Rex Nutting, Marke****ch Last update: 9:54 a.m. EST Jan. 4, 2008 WASHINGTON (Marke****ch) -- 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. Stocks sold off on the report, while bond prices rose. The yield on the benchmark 10-year note fell to 3.85%. See Market Snapshot. 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. Economists were expecting payrolls to increase about 58,000 in December, according to survey conducted by Marke****ch. See Economic Calendar. Job growth was revised up by a total of 10,000 in November and October. Read the full report. 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%. Economists were expecting the rate to rise to 4.8% in December. The jobless rate had been under 5% for 25 consecutive months. Recession view 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. Ahead of the report, the Fed was expected to cut its overnight lending rate by a quarter- percentage point later this month to further stimulate the economy, which has slowed significantly with the collapse of the housing market and turmoil in the credit markets. The surge in unemployment could encourage the Fed to cut rates by a half-point. "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. However, the Fed's hands are tied somewhat by worries about inflation, and the jobs report added to those concerns. Average hourly earnings rose 7 cents, or 0.4%, in December, more than the 0.2% gain expected. Earnings have increased 3.7% in the past year. Construction 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. Total hours worked in the economy were unchanged. The average work week was steady at 33.8 hours. Hours worked in manufacturing decreased by a substantial 0.7%. 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. End of Story Rex Nutting is Washington bureau chief of Marke****ch. George W. Bush - the 43rd Best President Ever! |
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