Jobs and the Economy

[Timber Loftis]

The Lord Giveth:

Unemployment Rate Falls to 5.7% as Job Growth Surges By DAVID LEONHARDT The economy unexpectedly added almost 150,000 jobs last month and the unemployment rate fell to 5.7 percent, the Labor Department said today, relieving worries that the country could be slipping into a new recession. After rising to 6 percent at the end of last year, the jobless rate dropped more in January than it had in a single month since 1998. "The worst fears from November and December were washed away," said Steven Wieting, a senior economist at Salomon Smith Barney. "The labor market has shown the first signs of healing, but it's weak." Many analysts cautioned that the big employment gain might not be a signal of a strong economic recovery, however. Much of last month's increase stemmed from seasonal factors that the government uses to adjust its statistics; a lack of hiring by retailers made December's numbers look worse than they were, and the absence of the normal retail layoffs in recent weeks made January appear better. Investors seemed largely unimpressed by the new data. Stocks were down in late morning trading, while the dollar rose moderately. Bonds recouped some of their early losses. "Although the headline number is better than expected, I don't think this changes the basic employment picture," said Richard D. Rippe, the chief economist at Prudential Securities. "We've had rough job stability over the last eight or nine months." The loss of jobs since the recession began in March 2001 remains the worst in almost 20 years. "A better outlook awaits some relief over these concerns about war," Mr. Wieting said. But the report clearly offered some reasons for optimism. Construction companies added 21,000 jobs, their largest gain since August, as the housing boom continued. Hotels added workers for the fourth consecutive month, their longest growth streak since 2000. Manufacturing, which has been hit harder than any other industry during the downturn, cut another 16,000 jobs, its smallest reduction since last summer. Joblessness declined most last month among groups that typically suffer the worst effects of recessions. The unemployment rate for African-Americans fell to 10.3 percent last month, from 11.2 percent in December, while the rate for whites remained 5.1 percent. It was 8.5 percent for workers without a high-school diploma, down from 9 percent, and 3 percent for those with bachelor degrees, up slightly from 2.9 percent.

And The Lord Taketh Away:

Stocks Lose Opening Gains By REUTERS Filed at 11:05 a.m. ET NEW YORK (Reuters) - Stocks slipped Friday, wiping out an early rise, as nagging fears over war and earnings took the luster off a report showing the nation created new jobs at its fastest rate in more than two years in January. Skittish investors are refusing to make big bets with the looming threat of a U.S. military strike on Iraq. President Bush Thursday warned "the game is over" for Iraqi President Saddam Hussein. Top U.S. officials are likely to recommend to Bush on Friday that the nation's color-coded threat assessment be raised to the second highest level on the grounds that they see a higher risk of terror attacks, officials said. A closely watched jobs report that showed a drop in the unemployment rate and rise in the number of workers on U.S. nonfarm payrolls sparked a brief, opening rally, but edgy investors headed back to the sidelines ahead of the weekend. The blue-chip Dow Jones industrial average fell 42 points, or 0.53 percent, to 7,886. The broad Standard & Poor's 500 Index lost 5 points, or 0.63 percent, to 832. The technology-loaded Nasdaq Composite Index fell 12 points, or 0.94 percent, to 1,289. Companies ranging from computer services provider Electronic Data Systems Corp. to party goods chain Party City Corp. are cautioning that 2003 will be another difficult year against the murky geopolitical backdrop. "The economic data was heartening, but not overwhelming. As people pull it apart, they're finding there are seasonality issues in there, so maybe December and January are sort of a wash," said Jim Herrick, head of equity trading at Robert W. Baird & Co. "The focus is on Iraq and North Korea, and it's Friday, too." Dell Computer Corp., the No. 2 personal computer maker, fell 40 cents, or more than 1 percent, to $23.62. The company said that corporate spending on technology will be soft this year due to the weak economy and concerns about a potential U.S. war with Iraq. Computer services provider EDS said first-quarter and full-year profit would miss expectations. The company added 34 cents, or 2 percent, to $16.06. Analysts said EDS lowering its guidance was not unexpected, but they expressed concern that it was relying on a pick up in spending during the second half of the year.

[Grojlach]

I don't care that much for stocks, but the lower unemployment rate is definitely a good sign. [img]smile.gif[/img] Let's hope this is the beginning of the end of the recession, not trying to think about what an Iraqi war would do to US economics.