January Employment Data Contains Warning Signs

Call it the calm -- or growth -- before the storm. Despite another large decline in the manufacturing industry, nonfarm payroll employment enjoyed a sizeable gain in the first month of the new millennium. The unemployment rate, however, did rise to 4.2%, up from December's 4.0%. This increase, along with no gain in hourly earnings, may be signs of something bigger considering the recent tidal wave of layoff announcements.

Call it the calm -- or growth -- before the storm.
Despite another large decline in the manufacturing industry, nonfarm payroll
employment enjoyed a sizeable gain in the first month of the new millennium. The
unemployment rate, however, did rise to 4.2%, up from December's 4.0%. This
increase, along with no gain in hourly earnings, may be signs of something
bigger considering the recent tidal wave of layoff announcements. (See href='/news/news.html'>Top Stories.) Said John Challenger of the employment
research firm Challenger, Gray & Christmas, 'It's not a question of if; it's
now when.' 


Total nonfarm payroll increased by 268,000, according
to the Labor Department's January 2001 Employment Report, well above analyst
expectations. After two months of adverse weather, more favorable conditions in
January forced construction employment to jump way up. A deeper look
shows:



     
  • Government employment was up 37,000.
     
  • Construction employment increased
      145,000. 
     
  • Engineering and management services added 10,000
      jobs.
     
  • Employment in services gained 81,000 jobs,
      duplicating December's gain.
     
  • Retail trade rose 27,000 after no gain in
      December.
     
  • Wholesale trade employment declined for the second
      straight month. 

The manufacturing industry lost another 65,000
jobs in January, bringing its December-January loss total to 127,000. Not
surprisingly, motor vehicles had the largest decline. A few of the bigger losers
are listed below.



     
  • Motor vehicles (38,000)
     
  • Fabricated metals (13,000)
     
  • Rubber and miscellaneous plastics (4,000)
     
  • Lumber (6,000)

At a Glance: Hours and
Earnings



     
  • The manufacturing workweek increased 0.5 hour to
      40.9 hours; overtime rose 0.1 hour to 4.1 hours. Both results are mainly
      attributed to the favorable January weather.
     
  • Average hourly earnings remained at $14.02,
      following three months of above-average gains.
     
  • Average weekly earnings were up 0.6% to
      $480.89.
     
  • Over the past 12 months, average hourly earnings
      and weekly earnings have increased by 3.9% and 3.3%, respectively.

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