--US jobs data shows labor market continues to ease: Analysts
By Mariko de Couto, BridgeNews
New York--Jan. 5--The December employment report, seemingly relentless sturdiness in some numbers, continues to tell a tale of an easing U.S. labor market amid an economic slowdown, economists said. The blip up in the earnings number in the last two months of last year is not disconcerting and the jobs data, as a result, do not change the view that the Federal Reserve could ease again at the policy meeting on Jan. 30 and 31.
December nonfarm payrolls rose 115,000 which was slightly higher than the consensus forecast of a 102,500 gain, while the unemployment rate was slightly lower than anticipated at 4.0% compared with the 4.1% consensus view. The earning number was a little stronger than expected, posting a 0.4% rise compared with the 0.3% increase economists had expected. And a rise was also seen in November where the earnings number was revised upward to a gain of 0.6%. (Story .4790) Even with some slightly higher readings in the December jobs data, economists say that the report in itself does not add or subtract from the view that the Fed has to stick to its guns and ease its credit reins further to prevent a crash-landing of the economy. The slightly higher-than-expected reading of December non-farm payrolls wasn't that much of a problem because the bulk of the gain, as expected, was due to an increase in non-private government payrolls which rose 56,000 in December. Economists had expected the number of federal workers to rise in December after a 54,000 decline in November. In fact, the gain in non-farm payrolls number averaged only 77,000 for the last three months of the year, which is much lower than the average monthly gain of 187,000 for the first nine months of the year. Meanwhile, the Fed should and will be focusing on the weakness of the economy and easing labor conditions in mapping out monetary policy as all indications are for a loosening labor market after the red-hot performance for most of last year, economists said. The earnings number may have risen a little more than expected, but economists say that the gains in both November and December are not that worrying because they tend to be a lagging indicator. In fact, the leading indicators for the labor market such as weekly jobless claims are clearly proving that job conditions are on the ease, economists said. The slackening of the labor force is led by the manufacturing sector which many economists say are already experiencing a recession. In December, construction firms cut 13,000 positions after laying off a revised 7,000 workers in November. In total, manufacturing payrolls decline 62,000 after falling a revised 15,000 in November. Peter Kretzmer, senior economist at Banc of America Securities, said that the jobs data didn't alter his view the Fed could cut the federal funds rate again. He expects another 25-basis-point cut in the fed funds rate at the end of the 2-day meeting this month but does not preclude the possibility of a 50-basis-point easing.