My name is Tamarah and I would like to share my gospel animated video with a couple of gospel beats that I composed.
WASHINGTON (Reuters) – U.S. employers hired the fewest workers in nearly three years in December, but the setback was likely to be temporary amid signs that unusually cold weather may have had an impact.
The surprisingly weak job growth figures reported by the Labor Department on Friday, however, could cause some discomfort at the Federal Reserve, which last month announced plans to scale back its massive monetary stimulus program.
Nonfarm payrolls rose only 74,000 in December, the smallest increase since January 2011 and well short of the 200,000 jobs or so that most economists had expected.
While the unemployment rate fell 0.3 percentage point to 6.7 percent, its lowest level since October 2008, the decline mostly reflected people leaving the labor force.
Michael Feroli, an economist with JPMorgan Chase in New York, called the report “an ugly mix” but said: “We’d guess the underlying trend in job growth hasn’t materially shifted.”
U.S. stock prices were little changed, but yields on benchmark Treasury debt fell by the most since October. The U.S. dollar slipped against other currencies as traders bet economic weakness would further delay any eventual increase in interest rates by the Fed.
The step back in hiring was at odds with other indicators that have painted an upbeat picture of the jobs market.
Tempering the blow, the government’s survey of employers found 38,000 more jobs were added in November than previously reported. For all of 2013, the economy created 2.2 million jobs.
Construction employment fell last month for the first time since May and leisure and hospitality payrolls rose only marginally, providing hints that extremely cold weather in some parts of the country had held back hiring.
In addition, transportation payrolls recorded their first decline in five months, and the average workweek for all workers slipped by a tenth of an hour to 34.4 hours.
The smaller survey of households from which the jobless rate is derived showed 273,000 people stayed at home because of the bad weather, the most since 1977 and well above the 100,000 average for the month of December.
Economists said the cold weather may have dampened job growth by as much as 100,000 last month.
“We do not think that the disappointing December payroll number marks the beginning of a renewed downward trend,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York. “We continue to expect nonfarm payrolls will accelerate towards 200,000 to 225,000 in the course of this year.”
The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell 0.2 percentage point to 62.8 percent, returning to the more than 35-year low hit in October.
The decline, which may have partly reflected end-of-year retirements, accounted for two-thirds of the drop in the jobless rate, although a gauge of employment in the household survey also rose.
FED SEEN HOLDING COURSE
The report offered a cautionary note after a string of data – from consumer spending and trade to industrial production – that had suggested the economy ended 2013 on strong footing and was positioned to strengthen further this year.
Other data on Friday showed wholesale inventories rose more than expected in November, leading some economists to upgrade their forecasts for fourth-quarter growth.
GDP growth this year is expected to top 3 percent, a sharp acceleration from the 1.7 percent forecast for 2013.
In a sign of growing confidence in the economy’s prospects, the Fed announced in December that it would trim its monthly bond purchases to $75 billion from $85 billion.
Despite the weaker-than-expected jobs data, most economists held to the view that the Fed would enact a further, similar-sized cut at its next meeting on January 28-29.
Fifty-seven of 61 economists polled by Reuters after the report said they expected the U.S. central bank to trim its purchases by $10 billion at each of its meetings this year.
“I don’t think the Fed is going to change its mind,” said Bill Cheney, chief economist at John Hancock Financial Services in Boston. “The trend, in a broad sense, still looks quite favorable.”
Indeed, two Fed officials, St. Louis Fed President James Bullard and Richmond Fed chief Jeffrey Lacker, suggested as much. “I would be disinclined to react to one month’s number,” Bullard said. “For now we’re on a program where we’re likely to continue to taper (asset purchases) at subsequent meetings.
NOT ALL WEATHER
The private sector accounted for all the gains in employment last month, with government payrolls falling 13,000 after rising 15,000 in November.
Manufacturing employment rose 9,000. While that represented a fifth straight month of gains, it marked a slowdown from November’s hefty 31,000 count. The number of construction jobs fell 16,000, snapping six consecutive monthly increases.
Utilities jobs fell by the most in a year.
Not all the job losses could be blamed on the weather. The information sector shed 12,000 positions and healthcare employment fell for only the second time since 1990.
Employment in the retail sector accelerated after slowing in November. There were also payroll gains in professional and business services.
Average hourly earnings rose two cents. Over the past 12 months, hourly earnings have risen only 1.8 percent, a sign the tepid wage gains that have characterized the U.S. economic recovery continue.
A man in Florida holds up a sign looking for work. (Getty Images)
Unemployment fell to a five-year low of 6.7 percent in December, yet employers added just 74,000 new jobs during the month — the lowest monthly payroll increase in nearly three years.
So how does the “unemployment” number fall despite such weak job growth?
In simple terms, the U.S. Department of Labor stops counting people who have stopped looking for work. The “labor force,” as defined by the department, fell from 155.3 million in November to 154.9. This decrease of 400,000 accounts for nearly the entire drop in unemployment — from 7 percent in November to 6.7 in December.
How the department calculates unemployment is rather simple: It takes the number of unemployed and divides it by the number of people it considers in the labor force. But does this provide an accurate account of how many people are really unemployed? Not really.
According to department statistics, nearly 11 million out-of-work Americans were not counted as unemployed in December. How is it determined who is and isn’t considered unemployed? Here are the department parameters for those who aren’t counted as part of the labor force:
Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
The department classifies those who fall in the “marginal” category as U-6. The chart below shows actual unemployment (as defined by the department) versus the U-6 number:
As you can see, when including those who fall in the U-6 category, unemployment remains above 13 percent.
Another troubling number is the labor force participation rate, which dropped to 62.8 percent in December — the lowest since December 1977, according to the Bureau of Labor Statistics. That translates to 91.8 million people not in the workforce.
Jason Furman, the White House chairman of the Council of Economic Advisers, said the latest jobs report shows that “as our economy continues to make progress, there’s a lot more work to do.”
House Speaker John Boehner wasn’t as impressed.
“There are more families living in poverty today than there were before the president took office, and instead of making it easier to find a good-paying job, Washington has been more focused on making it less difficult to live without one,” he said.
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