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Economy in Brief

U.S. Non-farm Payrolls Disappoint
by Tom Moeller January 9, 2004

Non-farm payrolls rose a weak 1,000 in December and gains in prior months were revised down.Consensus expectations were for a 150,000 December gain. Next month, the payroll figures will undergo an annual benchmark revision.

The index of aggregate hours worked fell 0.6% but for 4Q rose at a 2.2% annual rate versus 3Q. It was the first quarterly gain in hours worked since 4Q 2000.

From the separate household survey, the unemployment rate fell to 5.7% versus expectations for an unchanged 5.9%. The figures reflect benchmark revision.

Household employment fell 54,000 (+1.5% y/y) following strong gains of 438,000 and 451,000 in the prior two months. The labor force also fell by 309,000 (+1.2% y/y) following strong gains in the prior two months.

Manufacturing sector payrolls fell 26,000 (-3.4% y/y) following a like decline in November that was downwardly revised. The one-month diffusion index for factory payrolls fell to 38.1 from 42.9, and thus continued to suggest lower factory payrolls in the near term. Weakness in factory sector jobs was broad based.

Analysis of employment and sales in the computer industry by the Federal Reserve Bank of Dallas can be found here.

Service producing jobs rose a modest 13,000 (0.3% y/y). Jobs in the retail trade industry fell by 38,000 (-0.5% y/y) and jobs in the financial sector fell for the third consecutive month (+0.8% y/y). Temporary help services jobs were again strong, up 30,000 (7.7% y/y). Education & health services jobs also rose 21,000 (1.8% y/y) but government sector jobs fell for the eighth month of 2003 (-0.4% y/y).

Construction jobs rose 14,000 (2.1% y/y) for the second month.

The one-month diffusion index for private non-farm payrolls fell to 50.4% from 54.3 in November, suggesting minimal employment growth

Average hourly earnings rose 0.2% (2.0% Y/Y). Earnings in the factory sector rose 0.3% (2.3% Y/Y).

Employment Dec Nov Y/Y 2003 2002 2001
Payroll Employment 1,000 43,000 -0.1% -0.2% -1.1% 0.0%
  Manufacturing -26,000 -26,000 -3.4% -3.9% -6.9% -4.8%
Average Weekly Hours 33.7 33.9 33.8 33.7 33.9 34.0
Average Hourly Earnings 0.2% 0.1% 2.0% 2.9% 2.9% 3.8%
Unemployment Rate 5.7% 5.9% 6.0% 6.0% 5.8% 4.8%
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