Job Growth in 2004 Best Since 1999

U.S. employers added a net 157,000 jobs in December, bringing the positions gained by the economy in 2004 to 2.2 million -- its best showing since 1999, the government said Friday.

The nation’s unemployment rate remained at 5.4%, where it has hovered since midyear, the Labor Department said. In addition to the December numbers, department officials made upward revisions totaling 31,000 to the job totals of October and November.

President Bush called these “a very positive set of numbers.” A similar gain in January would let Bush avoid being the first president since Herbert Hoover to end a term in office with fewer jobs than when he began.

But the report received a lukewarm welcome from many economists.

They had expected somewhat greater job growth of 175,000 and expressed surprise that employers remained reluctant to hire more aggressively despite more than three years of economic expansion.

“American businesses are still not hiring with gusto,” said Mark Zandi, chief economist with Economy.com, a West Chester, Pa., forecasting firm. “There’s still a level of skittishness about conditions that’s holding them back.”

Economists generally expect a repetition of last year’s job trends during 2005. The National Assn. of Business Economists and the U.S. Chamber of Commerce predict that 1.5 million to 2 million jobs will be added this year. The administration has forecast job growth of 2.1 million during the year.

That the economy posted job gains at all in 2004 marked a distinct improvement over the preceding three years. Payroll employment slipped by 563,000 in 2002 and 61,000 in 2003 after plunging by almost 1.9 million in 2001.

Still, last year’s job growth remained 1 million shy of 1999’s total of 3.2 million, and analysts pointed to several signs of weakness in the latest report.

Manufacturing employment rose in December for the first time since August, but by only 3,000. Although for the year as a whole factory payrolls also grew, the increase -- at 76,000 -- was dwarfed by the loss of 3.2 million factory jobs between 1998 and 2003.

Average hourly earnings rose just 2 cents, or 0.1%, to $15.86 in December after a similar increase in November, the Labor Department said. Over the last year, average hourly earnings have increased only 2.7%, or about the same as consumer prices. Analysts said the modest increase signaled that working people had little bargaining power with their employers because of the lack of sustained job growth.

The nation’s labor-force participation rate -- the percentage of the working-age population that is employed or looking for employment -- continued to slip. Since peaking in mid-2000 at 67.3%, the rate has dropped back to 66%. The decline is seen as evidence that employers are not hiring in sufficient numbers to attract new entrants to the workforce.

The participation rate decline has been steepest among young workers, who economists think are remaining in school longer instead of trying their luck in a weak labor market. By contrast, the number of workers 55 or older who are working or looking for work has risen during the last four years.

Financial markets reacted guardedly to the latest job numbers. The market interest rate on a 10-year Treasury note remained at 4.27% after inching up earlier in the week in anticipation of the Federal Reserve’s continuing its campaign of rate increases intended to control inflation.

The major stock indexes slid, although it was unclear whether that had much to do with the job report. The Dow Jones industrial average shed 18.92 points, or 0.2%, to 10,603.96. The Nasdaq composite index slipped 1.39 points, or 0.1%, to 2,088.61 while the Standard & Poor’s 500 index declined 1.70 points, or 0.1%, to 1,186.19.

Among industries adding jobs in December, healthcare and social-assistance employers expanded by 36,000, bringing their total in 2004 to 342,000. Professional and business service firms hired a net additional 41,000 workers, bringing their full-year gain to 546,000.

The continued boom in housing caused some of the job growth, with the financial services industry adding 14,000 jobs and construction increasing employment by 13,000, its 10th straight month of expansion.

The unemployment rates for whites (4.6%), blacks (10.8%) and Latinos (6.6%) showed little or no change during the month.