U.S. adds 200K jobs in Dec; unemployment rate drops to 8.5%
By Michael A. Fletcher, Updated: Friday, January 6, 9:11 AM, The Washington Post
Private employers added 220,00 jobs, moving the total of private-sector jobs created in 2011 to 1.9 million. Governments, particularly at the local level, cut jobs, holding overall job growth for the year to 1.6 million.
The improvement in the labor market is surely welcome news for President Obama, who has been widely criticized for the nation’s poor labor market. With the 2012 presidential campaign intensifying, Obama has struggled to win public approval for his handling of the economy, and steady job creation can only boost his political standing.
The upbeat jobs report capped an up-and-down 2011 for the U.S. labor market.
After brisk growth in the beginning of the year, the labor market stalled in the wake of higher energy prices, the Japanese earthquake and the political fight over raising the nation’s debt limit. But the job market improved significantly in the final quarter of the year.
Even with the positive report, stubborn problems remain. Some 5.6 million Americans — 42.5 percent of the unemployed — have been jobless for more than six months, a figure that was unchanged in December.
Also, minority joblessness remained at catastrophic levels: the black unemployment rate was 15.8 percent in December, and the jobless rate for Hispanics was 11 percent.
House Speaker John Boehner (R-Ohio) cheered the report, even as he noted that the nation’s labor market remains troubled.
“It’s good news that more Americans found work last month despite a sluggish economy, but both parties must come together and do more to address the ongoing uncertainty that small businesses face,” he said in a statement. “Today marks the 35th consecutive month of unemployment above eight percent, and too many Americans continue to struggle to find their next job.”
The jobs report builds on a several new indicators pointing toward an economy on the upswing.
The government reported Thursday that claims for unemployment benefits declined in the final week of December, moving the average over the past four weeks to its lowest level in more than three years.
The Institute for Supply Management reported this week that its employment index for December was 55.1, the highest reading since June. A reading above 50 means that more companies are creating jobs than cutting them.
The nation’s factories have added more than 300,000 jobs since the beginning of 2010 — about 13 percent of what was lost during the recession — marking the first sustained increase in manufacturing employment since 1997, according to the Bureau of Labor Statistics.
Auto sales in December were up, continuing their substantial improvement from the summer. And for all of 2011, vehicle sales rose 10 percent.
On Thursday, several analysts cautioned not to make too much of the good news too soon.
Bernard Baumohl, chief economist for the New Jersey-based Economic Outlook Group, said that regardless of what happens with the December unemployment number, the economy faces major hurdles in 2012.
Europe’s economy is teetering on the edge of recession, and China’s roaring economy is beginning to cool, he said, developments that pose substantial risk to U.S. economic and employment growth. In addition, he said, oil prices are likely to rise next year as tension increases in the Persian Gulf and the broader Middle East.
Meanwhile, he added, business and individual consumers are likely to cut back, after a relative spending binge that helped increase economic growth by an estimated three percent in the final months of 2011. “The recent uptick in shopping, while cathartic, is simply unsustainable,” the firm wrote in its 2012 economic forecast.
Any or all of those factors could slow job growth in the early months of 2012.
“I have my concerns that the pace of job growth will likely slow in the first half of this year as the economy slows,” Baumohl said. “We just do not have a basis for optimism that the economy or job market has turned the corner.”