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You Can Use U.S. Job Market Flashes Mixed Signals
Thu January 29, 2004 10:38 AM ET
By Anna Willard and Kevin
Plumberg WASHINGTON and NEW YORK (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 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 smoothes 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 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 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: | 
