New US Labor Market Figures Renew Uncertainty About Econ

U.S. analysts and investors reacted with surprise to new figures showing the nation's labor market remains stagnant. But not people like Marty Jaffe.

Jaffe, a job counselor in suburban Cleveland, only had to look at his appointment log - filled for the upcoming week with back- to-back meetings with people searching for work, just the same as last week.

The puzzle, both for those who gauge the job market up close and those who sift through numbers, is figuring out what the disappointing figures released by the government on Friday say about where the economy is headed.

But after repeated projections that the job market would soon round the bend and help secure a recovery, there is renewed uncertainty about the economy.

"You wouldn't know that things are better based on the number of people who are either meeting with us or all the other job groups," says Jaffe, manager of InfoPLACE, a career counseling center at the Cuyahoga County Public Library branch in Maple Heights, Ohio.

"It sort of cuts across class and experience and education," says Jaffe, comparing the changes to the layoffs in the 1980s that focused mostly on northeast Ohio's factory jobs. Now, assembly line workers and executives "are both in the same boat."

The figures reported by the government on Friday, a snapshot of the job market in December, point to the breadth of the job cuts and the slowness of the recovery.

The national unemployment rate fell to 5.7 percent in December, the lowest level in 14 months. But employers did almost no hiring, with the drop in the jobless rate largely reflecting the fact that more than 300,000 U.S. citizens gave up looking for work.

The 1,000 new jobs created were far below the 150,000 new jobs economists expected. That is considered a key level because it is enough to absorb new entrants to the labor market and begin to offset existing unemployment.

The average unemployed worker continues to spend nearly 20 weeks looking for a job, the report said.

The bright spots were limited. One of the few was hiring by temporary employment agencies, often one of the first sources of new jobs in a recovery, which added 30,000 new positions in December.

Economists, noting that new layoffs have slowed substantially in recent months, said the report shows hiring remains the crucial missing ingredient essential to continued recovery.

"It is certainly sort of an Achilles heel in the economy," said Sophia Koropeckyj, of Economy.com, a West Chester, Pa,. forecasting firm. "If people perceive that we're not going to get a pickup in job growth quickly then their confidence in the economy is going to slacken, and...they're not likely to spend as much as they have."

The lack of job growth partly reflects the fact that companies are moving job overseas, even as they squeeze more productivity out of remaining U.S. workers, economists said. The increased productivity, due in large part to new technology in the workplace, has helped drive the economy's resurgence.

But some economists said the new employment figures make them question how much longer that can continue.

Koropeckyj raised similar doubts, noting that continued hiring by temporary agencies would swell the ranks of workers holding mostly lower paid jobs with fewer benefits. Hiring is likely to broaden in coming months, she said, but the economy may not show sustained gains of 150,000 jobs a months until early 2005, she said.

People looking for jobs and those who counsel them say they are looking past the figures, relying on personal experience. They see a labor market that is gradually warming, but slowly.

More than a year after he lost his job as a product development manager with a food processing firm, Dave Popp says he is getting more interviews and callbacks, although no offers, yet.

"I think the corner is being rounded right now. I think we're ready to start charging up the hill," said Popp, of Brecksville, Ohio, a Cleveland suburb.

Popp, who started an unemployment support group at his church, said the twice-monthly meetings continue to draw 40 people. But he senses a different mood. More jobs are being posted, he and other job seekers say. His friends with sales jobs say their corporate accounts - the same companies that are potential employers - are paying bills on time, always a good sign.

John Vaden, who runs Job Seekers, an unemployment support group in the Atlanta suburb of Dunwoody, also sees signs of a gradual improvement. More people report getting jobs, and attendance is down, he says.

But Vaden wonders about the latter.

"There's still a certain number of folks who have given up," he said, "and are still waiting for things to come around."