December jobs data a mixed bag

WASHINGTON -- Hopes that the U.S. economy is turning the corner were dashed Friday by new data showing that employers cut 85,000 non-farm payroll jobs last month, far more than the 8,000 that mainstream economists had expected.

December's cold snap was partly responsible; the weather-dependent construction sector alone lost 53,000 jobs last month, the Bureau of Labor Statistics reported.
Not all the news from the Labor Department was bad. The unemployment rate held steady at 10 percent in December, and statisticians revised November's job numbers to show positive growth. After first reporting that employers had shed 11,000 jobs in November, the BLS said Friday that they'd added 4,000 jobs that month. That's the first job growth since December 2007, the month that the deep recession began.

"The job market took a step back in December. Businesses are curtailing their layoffs, but they have yet to begin hiring, as they struggle to get credit and lack the confidence to expand their operations," said Mark Zandi, the chief economist for Moody's

Economy.com, a forecaster in West Chester, Pa. "The decline in employment was a bit overstated, as cold December weather weighed on construction and leisure and hospitality jobs."

The latest data sustained the recent trend of moderating losses in key sectors. Manufacturers shed only 27,000 jobs in December. Professional and business services added 50,000 jobs, on top of 86,000 in November. This points to a clear rebound in white-collar employment.

"We view the December setback in the trend improvement in monthly employment as temporary," Alan Levenson, the chief economist for investment firm T. Rowe Price in Baltimore, said in a note to investors.

In another sign of recovery, temporary employment, which has gained steam since July, increased by 47,000 jobs in December. Traditionally, employers offer temp jobs before they hire full time, to delay incurring all the costs associated with employee benefits.

Christina Romer, the head of the White House Council of Economic Advisers, emphasized the positive about Friday's decidedly mixed report.

"The coast won't be clear until we are adding jobs at a robust pace, until the economy is really recovered," she said on CNBC television, stressing the continued moderation in the pace of job losses. "The numbers that we saw today were a setback from November. ... We now know we added jobs in November."

However, Friday's report also pointed to continued structural deterioration in the U.S. labor market. Four in 10 unemployed Americans -- 6.1 million of the 15.2 million jobless workers -- have been without jobs for 27 weeks or more, the BLS said, adding that the number of people exiting the workforce also increased in December.

"The real news in these data is the 1.9 million erosion of the labor force -- those seeking work or working -- since May, with a 661,000 decline last month alone," said Lawrence Mishel, the president of the Economic Policy Institute, a liberal policy-research group. "Absent this flight from the labor market the unemployment rate would have risen substantially in December -- up 0.4 percent -- rather than hold steady."

Mishel and Zandi fear that the unemployment rate could shoot up later in the year if growth heats up and workers who've given up seeking jobs begin looking again. That will result in monthly reports showing businesses adding significant numbers of jobs even as the unemployment rate ticks upward.

"Clearly, the continued erosion of jobs -- though modest compared to earlier in the year -- and workers abandoning the labor market in droves, indicates we still have severe and growing employment problems facing Americans," Mishel said.
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DECEMBER EMPLOYMENT BY SECTOR:
-- Construction, fell by 53,000.
-- Manufacturing, down 27,000.
-- Leisure and hospitality, down 25,000.
-- Government, down 21,000.
-- Retail, off 10,000.
-- Services, down 4,000.
-- Health care and education, plus 35,000.
-- Professional and business services, plus 50,000.