WASHINGTON - The unemployment rate held steady at 4.0 percent in December 2000 as the number of workers on payrolls grew modestly, the U.S. government said today, Jan. 5, 2001, in a report that added to recent signs of a slowing economy. Although the rate was steady, economic analysts are pointing to a potential slowdown in the economy that may yield a higher rate for January.
Payrolls outside the farm sector grew by 105,000 after a sharply downwardly revised gain of 59,000 in November, the Labor Department’s Bureau of Labor Statistics (BLS) said in its monthly employment report. November's increase had previously been reported as 94,000.
The data are the latest in a series of reports depicting a downturn in the once-buoyant U.S. economy. Eager to soften the blow, earlier this week the Federal Reserve slashed key short-term interest rates by an aggressive half percentage point. Financial markets widely expect the U.S. central bank to cut rates further when policymakers hold their next meeting on Jan. 30-31.
The BLS said non-farm payrolls grew by a total of about 1.9. million in 2000, far below the jobs gain of 2.8 million in 1999.
Average hourly earnings rose 0.4 percent in December, which was more than the 0.3 percent increase expected by analysts. For all of 2000, average hourly earnings rose 4.2 percent, up from the 3.5 percent plus recorded for 1999.
STATE UNEMPLOYMENT CLAIMS INCREASE. Despite the steady U.S. unemployment rate for December 2000, the number of Americans filing new claims for state unemployment insurance last week climbed to its highest level in more than two years.
The BLS reported Thurs., Jan. 4, 2001, that initial applications for jobless benefits last week increased by 16,000 to a seasonally adjusted 375,000.
Another sign of a slowing economy is the announcement yesterday that Sears, Roebuck and Co. will close 89 under-performing stores and cut 2,400 jobs. Additionally, some automakers have temporarily shut plants or reduced production because of slackening demand.
The more stable, four-week moving average of jobless claims, which smoothes out week-to-week volatility, rose last week to 352,250.
Both last week's initial claims and the moving average were at their highest points since July 4, 1998, when they stood at 384,000 and 365,000, respectively.
Information compiled from the Bureau of Labor Statistics monthly report and articles by Reuters Writer Knut Engelmann and Associated Press Writer Jeannine Aversa.