Friday, December 05, 2003

It was going to happen -- people could just feel it:

U.S. factory activity rocketed to its fastest pace since 1983 in November and construction spending hit another record high the prior month, according to reports on Monday showing the economy's rapid growth is starting to turn the tide of three years of job losses....

"It's pretty eye-popping. If you look at the components, everything is very positive," said Stephen Stanley, senior markets economist at RBS Greenwich Capital.

That good news means government data to be released on Friday could show an even bigger rise in November payrolls than the 135,000 gain forecast by economists, after an increase of 126,000 in October.

"People have really underestimated the speed and improvement in the labor markets," Stanley said....

--Reuters story, 12/1/03

But instead:

American employers hired far fewer workers than expected in November, a government report showed on Friday...

The number of workers on U.S. payrolls outside the farm sector in November edged up by 57,000, the Labor Department said, from an upwardly revised climb of 137,000 the previous month.

The November gain was far lower than forecasts for a bumper increase of 150,000....

--Reuters story today

What happened?

This is from a Wall Street Journal Online/Yahoo News story:

Economists surveyed by Dow Jones Newswires and CNBC had forecast unemployment to remain steady at 6% and expected a rise of 150,000 in payrolls. The average workweek grew to a 14-month high, indicating employers are running out of ways to meet demand with reduced work forces.

Er, apparently they aren't running out of ways to squeeze productivity out of existing workers (and temps, and overseas workers) as fast as the experts thought.


And, of course, even with the upticks we're still lagging way behind (a) various administration predictions for job growth, (b) the rate of job growth needed to make up for job losses since Bush took office, and even (c) the rate of job growth needed just to employ new entrants into the workforce -- as the Economic Policy Institute notes:

On October 21, The New York Times reported that Treasury Secretary John Snow projected that the economy will generate two million additional jobs, about 200,000 per month, before next year’s election. This new number is a huge retreat from the administration’s previous projection made when it was selling its tax cuts. In February the Council of Economic Advisers projected 306,000 per month job growth starting in mid-2003 if the tax cuts were passed and roughly 228,000 jobs created per month without the tax cuts.

Monthly job creation of 200,000 and maintaining unemployment at its current level is far from a satisfactory economic performance. It takes monthly gains of about 150,000 payroll jobs and 155,000 in household employment just to keep the gap in jobs since March 2001 from widening further. Even with job gains of 306,000 a month, as promised by the Administration early this year, it would take more than four years to close the jobs gap that two and a half years of job losses have created.

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