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Workers income fell { December 4 2004 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A34116-2004Dec3.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A34116-2004Dec3.html
November Job Growth Slowed as Income Fell
Gain Was Smallest Posted in 4 Months
By Nell Henderson and Amy Joyce
Washington Post Staff Writers
Saturday, December 4, 2004; Page E01
U.S. job growth slowed sharply last month, and many workers' incomes fell, as automakers, airlines and retailers trimmed their payrolls, reducing consumers' buying power just as the holiday season was beginning.
Employers added 112,000 jobs in November, the smallest gain in four months, and below the roughly 150,000 per month that economists think are needed to keep up with population growth, the Labor Department reported yesterday. The department also shaved 54,000 jobs off its previous estimates of October and September gains in non-farm payrolls.
The unemployment rate slipped to 5.4 percent from 5.5 percent, which the department called "about unchanged," noting that it has been at either of those two levels every month since July.
Average weekly wages dropped by $1.25 to $533.47 for most workers on private payrolls.
The earnings figures help "explain the weak start to holiday retail sales," Stuart G. Hoffman, chief economist at PNC Financial Services Group Inc., wrote in an analysis.
The labor report came a day after the nation's major retail chains reported disappointing results for November. Sales at stores open for more than a year rose just 1.7 percent last month, compared with a 3.7 percent gain in November 2003, according to the International Council of Shopping Centers. Several companies reported falling sales, including Gap Inc.; Federated Department Stores Inc., which owns Bloomingdale's and Macy's; and May Department Stores Co., which owns Hecht's, Lord & Taylor and Filene's.
Several big chains, including industry giant Wal-Mart Stores Inc., quickly announced that they will use deeper discounts and bigger promotions to try to win the business of the lower- and middle-income shoppers who have been hit hardest by recent increases in food and energy prices.
"The recent job picture indicates that the holiday shopping season will be a decent, not spectacular one," wrote Sung Won Sohn, chief economic officer for Wells Fargo Bank.
The job numbers did not change widespread expectations that the Federal Reserve will raise its benchmark short-term interest rate for a fifth time this year when policymakers meet Dec. 14 and that it will continue to move it up gradually in the year ahead to keep inflation contained.
Many economists, including some at the Fed, have worried that sluggish job and wage growth might sap the strength of the economic expansion in coming months, particularly at a time of rising interest rates, a growing trade gap and uncertainty about oil prices. For some, this is an argument that might justify a slightly slower pace of rate increases over the next year.
But other Fed officials think the labor market is improving enough to help fuel solid economic growth and that the risks of inflation justify a relatively steady path of rate increases. These officials accept it as likely that the pace of job growth may swing from month to month in the year ahead, just as it has this year. One major reason is that employers continue to find ways to boost productivity, or output per labor hour, allowing them to expand without as much hiring.
The November payroll increase was about a third of the 303,000 jobs added in October, a hiring burst that partly reflected the post-hurricane cleanup and reconstruction efforts in the Southeast.
Construction and temporary jobs surged in October, as companies across the country provided labor and materials for the cleanup and reconstruction efforts. Both job categories rose by much less in November. All the Labor Department job figures are adjusted for seasonal variation.
Total U.S. job gains have averaged 178,000 a month since September, but some economists expect that rate to fall in coming months as the boost from the hurricanes fades and as economic growth cools slightly.
"The bottom line is payroll job growth is anemic," said Richard A. Yamarone, director of economic research at Argus Research Corp. "Economic growth is moderating, and businesses don't need to pick up the pace of hiring."
Hiring was slower across many industries, with some of the better job growth reported in the leisure and hospitality, education and health areas.
However, those gains were partly offset by job losses in other areas.
Manufacturers shed 5,000 jobs, the sector's third consecutive monthly decline. Automakers, for example, have cut production to reduce bloated inventories.
Retailers actually added nearly 300,000 more workers last month. But hiring was far less robust than usual going into the holiday period: Adjusting for seasonal hiring patterns, the figure represents a decline of 16,000 jobs, according to the Labor Department. It is the fourth year in a row that November retail hiring has fallen on a seasonally adjusted basis. Gasoline stations, department stores and stores selling clothing, sporting goods, books and music all reported declines last month.
The fall reflected several factors, analysts said. Many retailers cut back on holiday hiring as they sensed weakening demand from middle- and lower-income households, whose wages have not kept up with inflation.
The growth in online shopping also has shifted an increasing amount of buying out of the stores, reducing the need for extra holiday retail workers.
But additionally, retailers, like other businesses, are working to hold down labor costs to protect their profit at a time when consumers are resisting price increases, analysts said. Sears, Roebuck & Co., for example, hired 42,000 seasonal workers this year, up from 30,000 last year but fewer than the 50,000 holiday workers it hired in 2001.
Last year, the company reduced its total workforce, including both seasonal and year-round employees, by setting up centralized cash registers and by turning some departments into self-service areas. The company will add cashier stations to areas as needed during peak times, said spokesman Bill Masterson. "It gives us the ability to flex up and down to meet demand."
© 2004 The Washington Post Company
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