Washington, Jan. 10 (Bloomberg) -- The U.S. unemployment rate stayed at 6 percent in December, matching an eight-year high, and payrolls fell by the most in 10 months as companies focused on cutting costs. Employment fell by 101,000 after dropping by a revised 88,000 in November, the Labor Department said. The November drop was twice the number originally reported, and the back-to-back declines were the first in eight months. The jobless rate was the same as in November. ``It's been a jobless recovery, and it doesn't look like that has changed yet,'' said Bill Quan, chief economist at Mizuho Securities USA Inc. in Hoboken, New Jersey, before the report. ``In an uncertain environment, companies are making do with what they have.''
That was reflected in large job losses in the retail industry. Retailers cut 104,000 positions, the most in a year, after losing 40,000 a month earlier, as merchants coped with a holiday shopping season in which sales rose at the slowest pace in three decades. Best Buy Co., the largest U.S. electronics chain, closed 110 money-losing Musicland stores during the fourth quarter. Job losses at employers from Alcoa Inc. to the Mormon church also hurt. The economy has almost 1.8 million fewer jobs than in March 2001, when the economy slipped into a recession that has since ended. Many economists say that unemployment will creep higher this year.
Bad Year
``I just don't see any significant job creation until we move further into the year,'' said Geoffrey Somes, an economist at Fleet Bank in Boston, before the report. ``There is still a lot of caution there.'' He projects that unemployment will peak at 6.1 percent. Last month's job losses completed a year in which the jobless rate rose from a three-decade low of 3.9 percent just two years earlier. The economy has struggled to rebound, and coupled with accounting scandals that pushed companies such as WorldCom Inc. into bankruptcy, millions of people have been pushed onto the jobless rolls. President George W. Bush this week proposed a $670 billion plan to end taxes on stock dividends and accelerate income tax cuts, saying it would help create 2.1 million jobs. On Wednesday, he signed legislation extending for five months a program that provides an extra 13 weeks of benefits for laid-off workers who exhaust their state aid.
Expected Increase
Economists had expected payrolls to rise by 20,000 after a decline of 40,000 previously reported for November, based on the median of 55 forecasts in a Bloomberg News survey. Economists had also projected the jobless rate would stay at 6 percent. The report is the latest to suggest that the economy is expanding without creating jobs. The share of consumers seeing jobs as hard to get rose in December to 29.8 percent, the highest since May 1994, a Conference Board survey found. So far this month, Alcoa Inc., the world's largest aluminum maker, and AT&T Corp., the biggest long-distance company, have announced plans to cut jobs, which may keep the jobless rate elevated. Alcoa cut 110 jobs at a smelter in Massena, New York last month. About 600 of about 1,000 eligible employees of the Church of Jesus Christ of Latter-day Saints, accepted voluntary early retirement during the month, the Salt Lake Tribune reported. The church, Utah's largest employer, is cutting hundreds of jobs because of declining investment income and member contributions and an expensive temple-building program, the newspaper said.
Workweek Shortened
The unemployment rate and the payroll figures sometimes differ because the government's monthly job growth figures are based on a survey of 300,000 businesses, and the unemployment rate is based on a survey of 60,000 U.S. households. Today's payroll report showed that the U.S. economy had 130.7 million jobs in December, down from a peak of 132.46 million in March 2001, when the U.S. entered recession. The private workweek shortened to an average 34.1 hours in December, down from 34.2 hours in November. More than half of all industries subtracted workers. The number of people who have been out of work for six months or longer was 1.86 million, up from 1.1 million in December 2001. The weak demand for labor is also showing up in workers' incomes. Earnings may be improving. Average hourly earnings increased 0.3 percent, or 5 cents, after rising 0.2 percent, leaving earnings up 3 percent over the past year. Average weekly earnings rose to $510.82 from $510.61 in November.
Factory Losses Continue
Factories lost jobs for the 29th straight month. Hardinge Inc., an Elmira, New York-based maker of industrial cutting and tooling machines, said it fired 40 employees last month as orders remained low. Bowater Inc., the biggest U.S. newsprint maker, last month said that it would eliminate 500 jobs, including 125 that month, as part of a plan to reduce annual costs by $40 million. Temporary-help companies, which generate orders from factories, filled 19,0000 positions, after losing 27,000 the month before. At Kelly Services Inc., the second-largest U.S. temporary employment company, ``demand is nowhere near the strength we have seen in past recoveries,'' said Carl Camden, the company's chief operating officer. Still, ``pockets of strong employment do exist in this economy,'' he said, citing demand for workers in health- care, information technology, and financial services. Employment at financial services firms, including investment companies, banks, insurance, and real estate rose 8,000 in December after increasing 7,000 in November. Service-producing companies, which include retailers, transportation companies and government agencies, fell 42,000 jobs after dropping 25,000 a month before.
Employment Figures
Employment at construction firms rose 3,000 after falling 4,000. Transportation companies lost 27,000 positions after losing 9,000 the month before. AMR Corp.'s American Airlines at the start of the month said it would eliminate 1,100 flight-attendant jobs by February as it reduces capacity to cope with sliding demand for travel. Wholesale companies lost 6,000 jobs after shedding 14,000 in November. The pool of available labor, which combines the number of unemployed job seekers, plus those not looking for work in the last 12 months who said they would take a job -- fell to 13 million in December from 13.2 million in November. The percentage of the U.S. population holding jobs fell to 62.3 percent in December from 62.5 percent in November. Among blacks, the unemployment rate rose to 11.5 percent from 11 percent in November. The jobless rate for Hispanics rose to 7.9 percent from 7.8 percent. Unemployment for whites fell to 5.1 percent from 5.2 percent. For teenagers, unemployment fell to 16.1 percent from 16.8 percent in November. The jobless rate for women rose to 5.3 percent in December from 5 percent. The U.S. economy probably slowed to a 1.5 percent pace in the fourth quarter, according to a Bloomberg News survey. Growth may rebound to 2.5 percent in the first quarter and 3 percent in the second quarter, the survey found. //www.quote.bloomberg.com