latimes.com/business/la-fi-mo-unemployment-rate-20120106,0,622163.story
Unemployment rate falls to 8.5%, lowest in nearly 3 years
By Don Lee
9:24 AM PST, January 6, 2012
REPORTING FROM WASHINGTON -- The nation's unemployment rate dropped further
in December, to the lowest level in nearly three years, as employers added a
healthy batch of new jobs to close out a tumultuous year on an hopeful note for
the millions of jobless American workers still struggling to get back on their
feet.
The Labor Department said Friday that the jobless rate edged down
to 8.5% in December from a revised 8.7% in November. The unemployment rate has
fallen steadily since August, when the rate was 9.1%, based on revisions
typically made at the end of the year.
Analysts say the big drop in
joblessness in recent months overstates the actual improvement in the labor
market. By the governmentfs definition, people are unemployed if they're jobless
and looking for work. Although layoffs at companies have receded, hiring has
remained generally tepid and many people have dropped out of the labor force
altogether; thus, they arenft counted as among the unemployed.
Still, the
December jobs report was a pleasant surprise to most analysts and good news for
the White House. The economy added 200,000 new net jobs -- the most since last
April and double the number added in November. Hours of work in the private
sector ticked higher last month, and average hourly earnings also went up
slightly.
"This is a really solid report, a huge step in the right
direction," said Heidi Shierholz, a labor economist at the Economic Policy
Institute in Washington.
The latest jobs report adds to the body of
evidence that the economy perked up in the fourth quarter, thanks to strong
manufacturing and business investments, as well as resilient consumer
spending.
There were some caveats in last month's job-growth numbers,
however. Although the data are seasonally adjusted, there was an unusual burst
of hiring in transportation -- 42,000 new messengers and couriers were brought
on in December -- and retailers added a larger-than-expected 28,000 positions
after fattening their payrolls by 39,000 in November. It's unclear how many of
those positions will last.
The warmer-than-usual December weather also
might have given a boost to payrolls. The hard-hit construction industry was up
17,000 jobs, for example.
Manufacturing, which has been a bright spot
throughout the sluggish recovery, added 23,000 jobs behind the strength of
producers of motor vehicles, metals and machinery. The healthcare industry added
29,000 jobs, a third of them at hospitals.
And eating and drinking places
boosted staffing by 24,000 at year-end, something Mesirow Financialfs chief
economist, Diane Swonk, attributed to "cash-rich companies [that] ramped up
their holiday parties and entertaining after a hiatus in the wake of the
financial crisis."
But hiring at financial and professional services was
dormant. The temporary-help industry cut 7,500 jobs in December. Government shed
12,000 from its payrolls -- all of that at public schools and other local
agencies.
These and other drags in the economy raise doubts about whether
the recent momentum can be sustained. Many analysts see only modest job and
economic growth this year, concerned about consumers' still-high debts and
ability to spend vigorously, the weak housing market and external headwinds such
as a recession in Europe that would hurt American exports.
In 2011, job
growth accelerated early in the year but fizzled in spring as harsh domestic
politics and shocks overseas -- the Arab spring, Europe's debt woes and Japan's
double whammy of earthquake and tsunami -- pummeled stock markets and took the
wind out of the economic sails.
For all of last year, the economy created
about 1.6 million net new jobs, up from 940,000 added to payrolls in
2010.
Still, total U.S. payrolls are down about 6.1 million from December
2007 at the start of the Great Recession. And last month, a full 2 1/2 years
after the recovery technically began, more than 13 million people remained
jobless, and an additional 8.1 million part-time workers said they could not get
full-time hours.
Even if the economy created 200,000 jobs every month
from now on, Shierholz estimated that it wouldnft be until 2019 that the economy
got back to its pre-recession unemployment rate of 5%, given the workforce
population increases.
"This report does not allow us to breathe any sigh
of relief for 2012," she said.
Copyright © 2012, Los Angeles Times