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U.S. job
market flashes mixed signals
Thursday January 29, 10:33 am ET
By Anna Willard and Kevin Plumberg
(Changes byline, adds NEW YORK dateline)
WASHINGTON and NEW YORK, Jan 29 (Reuters) - The U.S. job market is showing
some signs of life with the number of Americans lining up to claim first-time
unemployment aid edging lower last week, but businesses may still be nervous about
hiring, reports showed on Thursday. A separate report showed employment costs
in the final quarter of 2003 rose by the smallest amount in a year and by slightly
less than expected. "The declining trend of initial state jobless claims reinforces
expectations of an eventual substantial upturn by payrolls employment," said John
Lonski, chief economist at Moody's Investors Service ( News
- Websites
) in New York. Claims for state unemployment insurance benefits fell 1,000
to 342,000 in the week ended Jan. 24, down from a revised 343,000 the previous
week, the Labor Department said. Analysts were expecting claims of 340,000 after
the originally reported 341,000 in the Jan. 17 week. The closely watched four-week
moving average, considered a more reliable gauge of labor market health because
it smooths volatility, increased 750 to 346,000. A Labor Department official
said there were no special factors in the report. Some business managers may
not be comfortable with hiring just yet, however. A monthly report from the private
research group The Conference Board showed an index measuring help-wanted advertising
in U.S. newspapers fell slightly to 38 in December from 39 in November. "Business
executives continue to express caution about investing, as well as new hiring,"
said Conference Board economist Ken Goldstein. "This is the hurdle the building
economic momentum has to jump over," he said. In addition, the Federal Reserve
Bank ( News
- Websites
) of Chicago said its National Activity Index slipped in December, mainly
due to a lack of new jobs growth and slow manufacturing activity. The index fell
to +0.13 in December from an upwardly revised reading of 0.68 in November. Analysts
will be keeping a careful eye on the employment-related numbers ahead of the Labor
Department's January report on employment, due out late next week. December's
disappointing report showed only 1,000 new jobs were created, even though the
weekly jobless claims data had been pointing to an improvement. The weak employment
growth presents a challenge to President George W. Bush as he tries to take credit
for a recovering economy in the run up to the November election. EMPLOYMENT
COSTS RISE A pickup in the labor market is seen as crucial for a sustained
economic recovery. A separate report from the Labor Department showed U.S.
employment costs in the final quarter of 2003 rose by the smallest amount in a
year and by slightly less than expected. The Employment Cost Index, a broad
gauge of what employers pay in wages, salaries and benefits, climbed 0.7 percent
in the last three months of the year, down from a 1.0 percent increase in the
previous quarter. Wall Street analysts had been expecting a 0.9 percent rise
in costs. Climbing healthcare and pension costs helped to push up the index.
Benefits costs rose 1.2 percent, outpacing a 0.5 percent gain in workers' wages.
It was the smallest rise in benefits costs since the third quarter of 2002, while
the increase in wages and salaries was the slightest in a year. American businesses
have increasingly utilized technology and hired less expensive labor to cut down
costs. The resulting workplace productivity gains have put little pressure on
managers to expand their payrolls and dole out pay raises. Also, economists
say some employers are taking on temporary workers to try and contain costs until
they are convinced the economy is on a sound enough footing to need permanent
new workers. For the year, employment costs rose 3.8 percent, up from a 3.4
percent gain in 2002. Continue with: | 
