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		Home Page Mortgage News You Can Use U.S. Adds 112,000 Jobs, Less Than Expected; Unemployment Is 5.6 Percent Feb. 6 (Bloomberg) -- The U.S. economy added fewer jobs than forecast in January, restrained by a decline in factory employment. The jobless rate declined to 5.6 percent. Payrolls rose 112,000 during the month after a December gain of 16,000 that was more than previously estimated by the Labor Department. While the gain last month was the most in three years, payrolls rose an average 196,800 a month during the record 10-year expansion that ended in March 2001. Federal Reserve policy makers may be patient before raising interest rates until hiring accelerates. ``To have a sustained economy we must have more than 110,000 jobs created a month,'' said Alan Blinder, a Princeton University professor and former Fed vice chairman. Companies ``are strangely hesitant to hire given the strong growth in the economy.'' More job growth may be needed to raise incomes, helping boost spending and the economy. Democrats, looking to defeat President George W. Bush in November, have been critical of his economic policies, which they say are doing little to stimulate job growth. More than 2 million jobs have been lost since Bush took office in January 2001. The construction and retail industries added workers in January. The jobless rate was the lowest in two years and down from 5.7 percent in December. ``There's just not a lot of stimulus out there on the job front,'' said Tom Hill, chief executive of CRH Plc's Oldcastle Materials Inc., in an interview. Oldcastle, headquartered in Washington, is the largest U.S. producer of asphalt. ``We're doing more with less.'' Forecasts Economists had expected payrolls would rise by 175,000 last month following a previously reported increase of 1,000 in December, according to the median of 69 forecasts in a Bloomberg News survey. They projected the unemployment rate would hold at 5.7 percent. ``While this report was not as shockingly weak as December's, it nonetheless drives home the weakness of the employment recovery,'' said Chris Low, chief economist at FTN Financial in New York. Low had forecast a 200,000 rise. ``The Fed is not going to raise rates if there's sub-par job growth.'' The Treasury's 4 1/4 percent note maturing in November 2013 rose 19/32, pushing down the yield 7 basis points to 4.09 percent. A basis point is 0.01 percentage point. The changes take into account adjustments to seasonal variation calculations that affected the statistics back to 1999. The report also added new information on the size of the labor force derived from the 2000 Census. Manufacturing Manufacturers cut 11,000 jobs last month, the 42nd straight decline since August 2000. Some 1.7 million factory jobs have been lost since the end of the recession in November 2001. Employment in service-producing industries, which include retailers, banks and government agencies, rose 105,000 last month after rising 32,000 in December. The increase, was led by a 76,000 increase in retail jobs. Neal Soss, chief economist at Credit Suisse First Boston in New York, had expected a rebound in retail hiring last month because the government has trouble adjusting the numbers for seasonal variations during and after the Christmas holidays. Less hiring by retailers in December meant fewer job cuts last month, boosting the seasonally adjusted retail trade number, he said. The manufacturing workweek rose to 40.9 hours from 40.6 in December and overtime held at 4.6 hours. Fed policy makers last week highlighted the disparity between weak payroll figures and other measures of employment, such as claims for unemployment insurance, that have been improving. Bernanke After leaving their target interest rate at 1 percent, the lowest since 1958, policy makers said, ``although new hiring remains subdued, other indicators suggest an improvement in the labor market.'' Fed Governor Ben Bernanke said in a speech yesterday that ``as the economy continues to grow, and as firms are unable to meet that demand without hiring, we will see some increase in employment. The exact timing of that is difficult to tell, but I am pretty confident we will see some big numbers fairly soon.'' Still, policy makers can be patient with monetary policy ``over the next few months'' because a ``significant'' rise in inflation this year or next is unlikely, Bernanke said. First-time applications averaged 345,300 per week in the four weeks that correspond with the January employment survey, the fewest since February 2001, according to Labor Department figures. That compares with an average of 362,300 for the comparable period in December and 447,300 reached in the first week of May that was the highest in a year. Hours ``We intend to expand our distribution force where the market is growing,'' said Edward Liddy, chief executive Allstate Corp., the second-biggest U.S. auto and home insurer, in a televised interview with Bloomberg News yesterday. ``But many of our agencies are also hiring support staff. So they are getting larger at the same time as we are getting larger. It's a great combination.'' Average weekly hours worked for all employees rose to 33.7 hours in January from 33.5 the prior month, today's report showed. Economists had expected hours would rise to 33.8 hours, according to the Bloomberg News survey. Incomes increased last month. Workers' average hourly earnings rose 0.1 percent, or 2 cents, after a 0.1 percent increase the previous month. Economists had expected a 0.2 percent increase in hourly wages. Average weekly earnings rose to $522.01 last month from $518.25 in December. Consumers are still spending. Chain-store sales climbed 5.8 percent last month, the biggest January increase since 1999, according to a report yesterday from the International Council of Shopping Centers. Sales rose a larger-than-expected 5.7 percent at Wal-Mart and they increased 3 percent at Gap. Revisions The Labor Department also issued its annual benchmark revisions to employment figures with this report. The economy lost 1.05 million jobs since the recession ended in November 2001. That compares with a previously estimated 1.07 million before the benchmark revisions. Hiring gains have been hindered by a surge in productivity that's averaged 4.6 percent in the last two years, the most since 1950-1951, according to figures from the Labor Department yesterday. Among blacks, the unemployment rate rose to 10.5 percent from 10.3 percent in December. The jobless rate for Hispanics increased to 7.3 percent from 6.6 percent and for whites it fell to 4.9 percent from 5 percent. For teenagers, unemployment rose to 16.7 percent last month from 16.1 percent. The jobless rate for women fell to 5 percent from 5.1 percent. The jobless rate for men decreased to 5.1 percent from 5.3 percent. To contact the reporter on this story: Carlos Torres in Washington ctorres2@bloomberg.net. To contact the editor on this story: Kevin Miller at kmiller@bloomberg.net. Last Updated: February 6, 2004 10:38 EST   Back to Original Article: Mortgage News You Can Use   Continue with: Mortgage rates increase again Retailers report robust January sales Interest Rise Good News for Landlords? Staring down debt Bush budget an eternal mortgage How to deduct a boat loan during the tax season Home refinancings fall to 18-month low New Fed Policy To Change Housing GSEs' Cash Use
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