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Saturday, Jan. 9, 1999

1998 job market best in 41 years

Only in wartime has jobless rate sunk lower

By DAVE SKIDMORE
Associated Press

   WASHINGTON - A hiring surge at construction sites, department stores and restaurants cut the nation's unemployment rate to 4.3 percent in December and helped make last year's job market the strongest during peacetime in 41 years.
   The seasonally adjusted rate, down from 4.4 percent in November, returned to the level reached in April and before that in 1970, the Labor Department reported Friday.
   For the year, unemployment averaged 4.5 percent, the lowest since 3.5 percent in 1969 during the Vietnam War. Last year's mark was the lowest peacetime rate since 1957, when it averaged 4.3 percent.
   "It's a striking testimonial to the strength and resilience of the U.S. economy," said economist Allen Sinai of Primark Decision Economics in Boston. "These are really good times for American workers."
   The stock market rallied to a new record on the news, which implied corporate profits might not weaken as much as anticipated. The Dow Jones industrial average shot up 106 points to 9,643.
   And President Clinton celebrated the report during a luncheon speech to the Detroit Economic Club, even as the Senate prepared to proceed with his impeachment trial. Clinton noted that the 1998 rates for blacks, 8.9 percent, and Hispanics, 7.2 percent, were the lowest since the government began tracking them in 1972.
   "This is a rising tide that is lifting all boats," the president said.
   

A weaker '99

   Many economists predict the labor market will weaken somewhat this year, with the unemployment rate rising toward 5 percent - still quite healthy by historical standards.
   In December, employers added 378,000 jobs to their payrolls - the most in 15 months and nearly double what analysts had anticipated.
   Some of the gain reflected abnormally warm weather, which produced a huge seasonally adjusted 104,000-job increase in construction, the largest in almost 15 years.
   But much of it reflected the resistance of the service side of the U.S. economy to the global slump that began in Asia a year and a half ago.
   For the year, employers added 2.9 million jobs, compared with 3.4 million in 1997. That growth was achieved despite 234,000 job losses in manufacturing and 35,000 in mining, principally oil-drilling.
   Manufacturers of products used in construction, such as glass and plumbing fixtures, are still hiring. And the overall loss at factories in December, 13,000 jobs, wasn't as bad as the 63,000 in November and 59,000 from October.
   "We may have seen the worst in manufacturing," said economist William Dunkelberg of the National Association for Independent Businesses.
   

More construction

   In addition to favorable weather, construction also has been propelled by low interest rates. And payrolls in related businesses have grown strongly. Real estate firms added 5,000 jobs in December and 57,000 jobs in 1998, double the gain of 1997, and mortgage brokerages added 4,000 in December and 52,000 for the year.
   Low rates also fueled spending by U.S. consumers, offsetting a drop in export sales to foreigners. Separately, the Federal Reserve said Friday that consumers increased their outstanding debt at a 3.6 percent annual rate in November after adding to it at a rapid 11 percent rate in October.
   Retailers expanded their payrolls by 53,000 in December, reflecting big increases at restaurants, department stores and building-supply stores.
   Other areas of brisk job growth last year included temporary help firms and computer services. However, job growth slowed in health care because a crack-down on Medicare spending led to declines in home health care services.
   

Small jobless rise

   Economists who believe the jobless rate will rise somewhat this year point to a report Thursday from the outplacement firm Challenger, Gray & Christmas Inc. that layoff announcements doubled to 103,000 in December from November.
   But Labor Secretary Alexis Herman said companies don't always follow through on planned job cuts.
   "Recently Boeing Co. projected 48,000 layoffs over the next two years," Herman said. "We now know that the actual number is going to be about 40 percent of what was anticipated."
   Meantime, strong labor demand coupled with low inflation has increased Americans' buying power. Average hourly wages for nonfarm, nonsupervisory workers rose 5 cents in December to $12.98, up 3.8 percent from a year earlier.
   

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