Unemployment and Job Cuts in U.S. Riding Coattails of Recovery By Timothy R. Homan
Dec. 5 (Bloomberg) -- Employers in the U.S. cut the fewest jobs in November since the recession began, and the unemployment rate fell, signaling that the recovery is lifting the labor market out of the worst slump in the post-World War II era. Payrolls fell by 11,000, figures from the Labor Department showed yesterday in Washington, compared with the median forecast for a 125,000 decline in a Bloomberg News survey of 82 economists. The jobless rate declined to 10 percent. The dollar strengthened and Treasuries slid as the report indicated companies may start hiring again after the job market shrank by 7.2 million since December 2007. Staffing at temporary employment agencies jumped the most in five years, and a gain in wages gave consumers more to spend for the holidays. "This confirms the idea that the recession is over and has been over for several months," said Neal Soss, chief economist at Credit Suisse in New York. "It doesn't tell you that we'll have a strong recovery, especially not a strong rebound in the labor market." The Dollar Index, a gauge of the currency against six major trading partners, jumped as much as 1.8 percent yesterday. Yields on benchmark 10-year government notes climbed to 3.48 percent from 3.39 percent late yesterday. The Standard & Poor's 500 Index was up 0.6 percent to 1,105.98 after earlier rising as much as 1.8 percent. Traders increased bets that the Federal Reserve would tighten monetary policy in the third quarter of next year. Yields on the September federal funds futures contract rose by 11 basis points. A basis point is 0.01 percentage point. Record Low Rates Fed Chairman Ben S. Bernanke has pledged to maintain record-low interest rates until joblessness subsides, even as a recovery takes hold. Google Inc., owner of the world's most popular search engine, is hiring again after the company cut back during the recession, Chief Executive Officer Eric Schmidt said last month. The Mountain View, California-based company had about 19,665 workers at the end of the third quarter, down from more than 20,000 last year. "We are absolutely planning to increase our headcount and we're aggressively trying to find the best talent as we did historically," Schmidt said in a Nov. 11 interview. Corporate profits climbed 11 percent in the third quarter, the biggest increase in five years, according to Commerce Department data. It was the third straight quarter of profit gains, the first such streak since 2006. Revisions to Data Revisions added 159,000 to payroll figures previously reported for October and September. The October reading was revised to show a 111,000 drop in jobs compared with an initially reported 190,000 decline. The jobless rate was projected to hold at 10.2 percent, according to the Bloomberg survey of economists. Forecasts ranged from 9.9 percent to 10.4 percent. Christina Romer, President Barack Obama's chief economist, said that while the jobs report is "good news," the nation still needs to be "ready for bumps in the road." "We're on the right path, but I think we do need to be aware that these things do move around," Romer, head of the White House Council of Economic Advisers, said in a Bloomberg Television interview. The administration won't seek a second economic stimulus like the $787 billion package passed earlier this year, White House press secretary Robert Gibbs said yesterday. Instead, the administration is considering using money from the $700 billion Troubled Asset Relief Program, which was initially designed to shore up the financial system, to help the economy. Budget Deficit Obama said Dec. 3 at a White House forum on jobs that the budget deficit, which reached a record $1.4 trillion in fiscal 2009, would constrain the government from major initiatives to create jobs. The number of temporary workers increased 52,000 in November, yesterday's report showed, the biggest jump since October 2004 and the fourth straight rise. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff. The average work week grew to 33.2 hours in November from 33 hours, the biggest advance since March 2003. Average weekly earnings rose to $622.17. Improvements in the job market were broad-based. Builders, Restaurants Payrolls at builders declined 27,000 after falling 56,000 the month before. Service industries, which include banks, insurance companies, restaurants and retailers, added 58,000 workers after adding 2,000. Retail payrolls decreased by 14,500 after a 44,200 drop. Factory payrolls fell 41,000 after decreasing 51,000 in the prior month. The median forecast by economists called for a drop of 45,000. The decline included a drop of 6,300 jobs in auto manufacturing and parts industries. Financial firms reduced payrolls by 10,000 for a second month. The so-called underemployment rate -- which includes part- time workers who'd prefer a full-time position and people who want work but have given up looking -- fell to 17.2 percent from 17.5 percent. Bernanke on Jobs "Far too many Americans are without jobs, and unemployment could remain high for some time even if, as we anticipate, moderate economic growth continues," Bernanke said Dec. 3 in testimony to the Senate Banking Committee, which was considering his nomination to a second term as Fed chairman. Companies including Harley-Davidson Inc. are still trimming staff to wring out additional cost savings. The biggest U.S. motorcycle maker this week approved a restructuring plan at its largest plant, in York, Pennsylvania, which will result in the loss of about 950 union jobs. By contrast, Infosys Technologies Ltd., India's second- largest software exporter by revenue, plans to add 1,000 employees in the U.S. in the next four to five quarters, according to Chief Financial Officer V. Balakrishnan.
