Data point to frail recovery in U.S. jobs market
WASHINGTON — The economic data is mostly pointing in the right direction, but the weak economy has kept hopes in check for a big improvement in the government’s labor report Friday.
Analysts expect that a slowdown in job creation took place in January after December’s surge in holiday hiring, so that the Labor Department will report no improvement in the unemployment rate — 8.5 percent — when it releases its data for the month.
Underpinning that will likely be a fall in the net number of jobs added to the economy, to 155,000 from 200,000 in December, economists forecast.
The United States entered 2012 facing prospects of slow economic growth for some time to come, too slow to make a meaningful dent in stubbornly high unemployment — the pace of job creation has remained too sluggish to offset population growth.
That keeps ongoing joblessness the biggest challenge to President Barack Obama’s administration and his effort to be reelected in November.
But the January jobs market reading coming out Friday might not be a good indication of the overall trend, say analysts.
They warn that a number of technical issues, including seasonal layoffs, unseasonably warm weather, and benchmark revisions, could skew the numbers.
“There will be a break in the unemployment rate data series that will make January a stand-alone figure, not comparable to December or prior periods,” said Nomura analyst Ellen Zentner.
There have been signs of improvement under way in the labor market. The jobless rate has trended steadily downward from 9.1 percent in August to 8.5 percent last month.
Thursday’s Labor Department report on weekly new claims for unemployment benefits, an indicator of the pace of layoffs, showed the steady improvement as well.
The four-week moving average, which smooths out the volatile weekly data, fell for the fourth straight week and was 12 percent lower than one year ago. The week’s figure of initial claims, at 367,000, was also below the trend.
Yet a separate report Thursday showed planned layoffs on the rise last month.
Outplacement firm Challenger, Gray & Christmas said businesses in January announced plans to cut 53,486 jobs from their payrolls, the highest number since July. The cuts are mainly from the retail and finance sectors.
And a report from payrolls firm ADP on Wednesday showed business hiring fell by 42 percent in January after a December surge, worse than analysts expected.
Challenger said however that it was “not unusual to see a job-cut surge to start the year.”
“Historically, January is the heaviest job-cut month, averaging 101,084 announced layoffs between 1993 and 2011.”
“Progress, in both initial jobless claims and the overall labor market, has been frustratingly slow and uneven, albeit headed in the right direction — fewer job losses and net hiring,” said Sara Kline at Moody’s Analytics.
But, she warned, “the anemic pace of improvement is not likely to give way to accelerating growth in the coming months.”
RDQ Economics analysts noted the bright side, saying “though layoff announcements have run ahead of year-ago levels in the last two months, planned job cuts remain at historically low levels.”
Federal Reserve chairman Ben Bernanke, in testimony to Congress Thursday, reiterated concerns about persistently high unemployment, and especially the massive number of people jobless for long periods, which economists warn makes it increasingly difficult to find new employment.
More than 40 percent of the 13 million unemployed have been jobless for more than six months, Bernanke said.
“We still have a long way to go before the labor market can be said to be operating normally,” he told the House of Representatives budget committee.