Nation's job data show late drop-off

Jobless rate still 4%

hiring, home sales slow

firms laying off

Home sales, jobs data at year end signs of slowdown

January 06, 2001|By BLOOMBERG NEWS

WASHINGTON - U.S. sales of new single-family homes fell in November to the slowest pace in three months, and the economy added fewer jobs than expected last month as business payroll growth slowed to a four-month low and factories curtailed production, government reports showed yesterday.

Companies created 49,000 jobs last month, less than half the 111,000 added in November. Manufacturing jobs fell for a fifth straight month, and retailers added workers at less than a fifth of the pace of the 1999 holiday season. At the same time, seasonally adjusted unemployment held at 4 percent last month, still close to the 30-year low of 3.9 percent set earlier in the year.

"It shows the economy did lose quite a bit of momentum at the end of the year," said Bruce Kasman, an economist at J. P. Morgan Securities in New York. "You clearly see signs of substantial slowing in the economy through the labor market."

This week, several companies, including Internet retailer eToys Inc. and the No. 1 U.S. department store chain, Sears, Roebuck and Co., announced job cuts amid weaker-than-expected sales.

The jobs report means that Federal Reserve policy-makers might cut interest rates again by the end of this month, after surprising investors with a rate cut Wednesday and expressing concern about weakness in the economy.

The number of new business jobs was the smallest since August. Including government hiring, the economy added 105,000 jobs last month, fewer than the 113,000 analysts expected. Some said that suggests that the economy isn't cooling too much.

"Yes, we have an economic slowdown," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. "No, it does not appear that we are headed into a recession."

In another report, Commerce Department figures showed that while sales of new single-family homes fell in November, they did not stray off course to make last year the second-best on record.

The 2.2 percent drop in November sales to 909,000 houses at an annual rate followed a 1.1 percent drop the month before. Even so, lower mortgage rates helped push November sales up 1.6 percent from the year-earlier pace.

Wall Street reacted to the reports by shoving the Dow Jones industrial average down 250.40 to 10,662.01, and the Nasdaq composite index fell 159.18 to 2,407.65.

Analysts say the Federal Reserve's rate cut this week should rev up the economy, boost consumer confidence and buoy purchases after a December lull.

"We still expect strong numbers in the first few months of this year," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, N.Y.

The December employment report showed that average weekly hours worked fell to 34.1 from 34.3 the month before. Except for January 1996, when a blizzard paralyzed the Northeast, hours worked were the lowest since April 1991. Manufacturing overtime dropped to four hours last month from 4.3 hours in November.

That means "companies are reducing the hours people are working rather than laying them off," said David Orr, chief economist at First Union Corp. in Charlotte, N.C. "It might keep confidence up, but it doesn't make income grow."

Manufacturers shed 62,000 jobs last month after cutting 15,000 in November. Manufacturing last month slumped to the lowest level since the 1991 recession.

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