Yoon, Brian Sullivan>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue Herera.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Good evening, everyone. And welcome to a special edition of NIGHTLY BUSINESS REPORT.

The U.S. markets may have been closed today, but there is still, Sue, plenty to talk about.


The first two weeks of the year have been tumultuous to say the least, with oil prices continuing to plunge down double digits to start the year and fears that China`s economy might drag down any global growth out there. Our markets have been consumed with negativity.

MATHISEN: But there is one bright spot for the U.S. economy, and that would be the labor market. That is where we begin tonight.

The job market ended 2015 on a high note. And most are confident of continued strength this year. In fact, an improving labor market was the linchpin for the Federal Reserve`s plan to raise interest rates for the first time in a decade.

But as Hampton Pearson tells us, while that optimism abounds, some obstacles do remain.


HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: The 2016 job market is starting the year with a lot of momentum. A blockbuster December saw 292,000 new hires, and upward revisions boosted the fourth quarter average to 294,000 per month.

In his final State of the Union Address, President Barack Obama says predict sector growth has the foundation of the economic recoveries.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States of America right now has the strongest, most durable economy in the world.


We`re in the middle of the longest streak of private job growth in history.

PEARSON: Leading economists predict job gains well above 200,000 per month, and the economy is moving closer to full employment. But wage growth, especially for those between 25 and 54, the prime earning years, remain a challenge.

ELISE GOULD, ECONOMIC POLICY INSTITUTE: We want to see the prime age employment to population ratio to return to pre-recession levels. We want to see more people in the economy working. And we want to see stronger wage growth.

PEARSON: And dramatically declining oil prices may force even bigger job cuts in the energy sector in 2016. An instant replay of what happened last year, when roughly 20 percent of the 600,000 announced layoffs were tied to falling oil prices.

Public sector downsizing, including nearly 60,000 military personnel returning to the civilian workforce presents another challenge. Veterans hiring fares like this one in Washington, D.C. are tackling that challenge. More than 100 employers at this event offering hope to job seekers like Juan Lopez, a middle age vet who believes his search for a better-paying job is just around the corner.

JUAN LOPEZ, JOB SEEKER: Now that the holidays are over, I`m getting telephone calls, folks are scheduling interviews. I have some next week, and I`m feeling optimistic.

PEARSON: What is often overlooked is that Martin Luther King had an economic dream, he wanted to see an end to poverty and a guaranteed government middle-class income. Nearly 50 years after his death, the debate over how to achieve that part of the dream continues.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.


HERERA: So, with the strong job gains last year and the expected growth this year, who exactly is hiring? We know the energy sector has been and is an issue while restaurants and bars ratcheted up their hiring, but what about the under the radar sectors?

Mary Thompson takes a closer look at three areas where the jobs are.


MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Georgia is building a name for itself in movies. Thanks to a generous tax incentive, the state is now third in TV and film production behind California and New York. The state welcoming the industry`s rapid growth, and the estimated $6 billion in economic impact it`s bringing this year, though not everything is peachy.

LEE THOMAS, GA DEPT OF ECONOMIC DEVELOPMENT: We`ve had a little bit of a growing pain, in just that we`ve had a run-up so quickly.

THOMPSON: So, sometimes it`s hard to find in-state electricians, artists and others needed to staff a movie or show. Something EUE/Screen Gem Studios` Kris Bagwell said could cause industries to look for outside Georgia.

KRIS BAGWELL, EUE/SCREEN GEME STUDIOS: It`s a lot cheaper for production to hire local talent than to bring folks from L.A. and New York and have to pay their housing and per diem and everything else.

THOMPSON: Lee Thomas heads the state`s film and TV office. Along with keeping the tax incentive in place, she said Georgia needs to train workers to keep the shows and movies coming.

So, Georgia`s launching a film academy to train and certify entry level workers and retrain others looking to polish their skills for film.

THOMAS: It will be something that, you know, you can quickly put people through for very specific types of jobs. And if they want to go further with it, these certificates will be applicable to longer degrees.

THOMPSON: About 30,000 Georgians work for the TV and film industry, which Motion Picture Association of America says pays an average salary of $84,000 a year.

It`s one reason Rachael Crump, a widowed mother of four has gone back to school to be a script supervisor.

RACHAEL CRUMP, GEORGIA FILM INSTITUTE STUDENT: It seemed to be where all of the focus was going in Georgia.

THOMPSON: While for Rick Harris (NYSE:HRS), it jump-started the air- conditioning business he launched in 2007, cooling the set of the movie "The Blindside."

RICK HARRIS, HARRIS DIVERSIFIED LLC: Since we started in 2007, we basically doubled in size and equipment and staff, everything for the past several years.

THOMPSON: He`s gone from two units to 130, two employees to 14, and $1 million in revenue to several million -- proving you can make money in movies as a supporting player, a cast Georgia is looking to grow.

Another year of headline-grabbing cyber attacks on big name companies like Sony (NYSE:SNE), another year of double-digit growth for cyber insurance.

RANDY BINNER, FBR CAPITAL MARKETS & CO.: Cyber insurance could be one of the biggest opportunities in recent memory for the insurance market.

THOMPSON: A recently released survey by the insurance broker Marsh shows among its U.S. clients, first-time buyers of cyber insurance rose 32 percent last year, building on a 21 percent increase in 2013.

Among the industry seeing the most growth in first-time buyers? Hospitality and gaming, education and power and utility.

In this data-driven world, information is increasingly valuable. A client or proprietary information a cyber theft could use for their own benefit, or to harm the company on their crosshairs.

A roughly $2 billion industry, cyber insurance is still in its infancy. The insurers offering these policies including AIG, Chubb (NYSE:CB) and Hartford, all continued to tweet their underwriting -- changes analyst Randy Binner says it requires policy owners to make adjustments of their own.

BINNER: Even if they get an insurance policy to cover the cyber risk, the insurance company is going to require them to have processes, technology, reporting structures in place that help mitigate an event.

THOMPSON: Among other things, the policy should mitigate the cause of any disruption to a business, and the cost of helping customers impacted by an attack. But as the cost of the policies rise, Marsh said they rose 3 percent last year, Binner says some firms may choose to self-insure instead, posing a risk to the rapid growth of cyber insurance.

Wayfair promises clients to find a zillion things for their home. Meanwhile, the online retailer is looking for a couple of hundred new employees.

NIRAJ SHAH, WAYFAIR CEO AND CO-FOUNDER: We right now have over 500 open roles.

THOMPSON: Wayfair isn`t alone. Forrester Research (NASDAQ:FORR) says with e-commerce growing 10 percent a year at least through 2017, there is strong demand for a new breed of retail worker.

SHAH: We care about folks that are hardworking, bright, team-oriented or collaborative, and have the ability to use analytical insights or quantitative data.

THOMPSON: Wayfair CEO Niraj Shah is looking for programmers, designers and customer service reps, all at ease with the technology online retailers use to create and enhance their customer`s experience, which at Wayfair includes phone calls with design consultant Sarah Nunberg.

SARAH NUNBERG, WAYFAIR DESIGN CONSULTANT: I want them to feel like they are calling their own interior designer.

THOMPSON: Shah says it`s hard to find the ideal candidate, so Wayfair hires a lot of recent college graduates and then teaches some retailing on the job.

But there are places that teach the needed skills, knowing more and more shopping would move online, North Texas University launched a degree in digital retailing a few years ago.

ANAKARIN PETERSEN, UNIVERSITY OF NORTH TEXAS STUDENT: It`s not just the future. It`s pretty much the present right now.

THOMPSON: Students like Anakarin Petersen take courses in merchandising and Web site development where analytics and collaboration are emphasized.

RICHARD LAST, UNIV. OF NORTH TEXAS RETAIL RESEARCH CENTER: In the digital world, you work side by side with marketing, merchandising, IT, e-commerce, operations, and everything happens in such real time that you have to be really able to work in a team environment.

THOMPSON: Program director Richard Last says 82 percent of his students graduate with jobs -- jobs with good salaries, according to Forrester analyst Sucharita Mulpuru.

SUCHARITA MULPURU, FORRESTER RESEARCH RETAIL ANALYST: When you look at -- across the board at digital retail, they are generally well-paying jobs.

THOMPSON: How good? The government estimates e-commerce jobs pay close to double traditional retail jobs. And Forrester says salaries range from $40,000 for creative, like designers, to up to $80,000 for programmers, a new era in retailing with a good pay off for those with the skills to sell online.

In Westborough, Massachusetts, I`m Mary Thompson for NIGHTLY BUSINESS REPORT.


MATHISEN: Our guest today says he expects to see solid jobs gains in the labor market this year. He`s Bricklin Dwyer, senior economist with BNP Paribas.

Bricklin, welcome. Good to have you with us.

We`re going to talk about jobs and then we may range a bit into the broader economy.

The most recent jobs report for December was some 290,000 jobs. That`s an incredibly hot pace. Do you expect that to keep up?

BRICKLIN DWYER, BNP PARIBAS SENIOR ECONOMIST: We don`t. It was quite impressive. In fact, most of the market was expecting, including ourselves, something closer to 200,000. So, 50 percent more not a bad up side.

MATTHEWS: On average, this year, what are you looking for?

DWYER: You know, for this year, we`re expecting things show slow down, about $175,000 on average. The long term trend looks like something like closer to 100,000 to 120,000. So, you know, 175,000 is still pretty darn good.

HERERA: Does what`s recently been going on in the market -- the precipitous drop, the volatility, the fact that the market is down better than 7 percent so far this year, does that means influence at all your forecast, because at some point, we may see layoffs in the energy sector, things like that?

DWYER: Yes, it certainly does. We`ve already seen a lot of that layoff in the energy sector. You know, mining, kind of that secretary services area of mining, people pulling back on their rigs. So, we`re seeing that impact right now, but we`re also seeing a big of momentum in some other areas, you know, retail, leisure and hospitality, those momentum, health care, have been doing quite well. We do expect that momentum to be pared back a bit next year, but overall, you know, the momentum is till pretty decent.

MATHISEN: Health care has been a jobs adder over the past half decade or so. Do you see that continuing? I think note that those companies are peeling back a little.

DWYER: Yes, I think that`s right. You know, the recent Obamacare, you know, legislation, there`s a big ramping up and hiring in healthcare, trying to figure out how many people they really need. You tend to over- hire, and then you figure out how many can actually run with. So --


DWYER: So, you cut it back and keep the people you like. That sort of trend is happening.

HERERA: We`ve seen improvement, but the participation rate has been kind of a persistent problem in this record. It seems to be getting better. But is that still troubling to you, or have we changed the trajectory of that?

DWYER: You know, it`s kind of interesting. There`s a lot of focus on the participation rate, a lot of debate among economists, among the colleagues about just how much of that is structural versus cyclical. You know, from what I can tell, about half of it is due to aging population, which is worth about three tenths of the participation rate per year.

You know, surprisingly, looking in the past few years, we`ve only averaged about 0.37, so really not that farther off the trend of the decline in participation, but we do have room for a bit of a rebound.

MATHISEN: To the broader economy, you have the Federal Reserve indicating they hope to raise interest race three, four times this year. But in the most recent trading sessions, bond yields have gone down, approaching 2 percent again. What is the bond market telling you about the health of the U.S. economy?

DWYER: First, they don`t believe the Fed. They don`t think, you know, what they say is going to happen. That was certainly true right up until the last minute in December when the Fed actually delivered a rate hike.


DWYER: There was just an unbelievability factor. We`re in that camp right now, where we have this turbulence from abroad, Sue. We have a lot of factors like oil that are really kind of plaguing the minds of people who are doing hiring and things like that.

And that means a bit of uncertainty for stocks. We`re seeing that impact right now, and that feeds into Fed policy. So, from the Fed`s perspective, they`re kind of setting a trajectory. They just need to see something broadly in line with their expectations. As long as they get that, they`ll be --

MATHISEN: They`ve move ahead?


MATHISEN: All right. Bricklin, thank you very much. Appreciate you being with us.

DWYER: Thanks.

MATHISEN: Bricklin Dwyer with BNP Paribas.

HERERA: A cooling of the world`s second largest economy sends a chill around the globe. The ramifications, next.


MATHISEN: China has been an area of concern in the early part of the year, so far. Fears that the world`s second largest economy is slowing rapidly has been sending shockwaves through global markets. And that slowdown is being played out in two important sectors, manufacturing and energy.

Eunice Yoon has a fair of examples.


EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you`ve ever bought a decorative glass lamp at Home Depot (NYSE:HD) or Lowe`s in the U.S., chances are it was made by Eric Lee. From his factory in China, the Taiwanese businessman has been making colored glass for light fixtures for 15 years, but he`s not sure he`ll be doing it for much longer.

"Our factory has been facing big challenges this year," he says. "The business has dropped by 10 percent."

China`s economic rise was powered by manufacturers like Lee, but with demand so sluggish for Chinese products both at home and overseas, the government says hundreds of factories have been deserted. Businesses fear the plant closures are in the thousands with so many in the country`s industrial south now for lease.

We`re in the manufacturing town of Dongguan. We`re in a part of the city that used to be one of the most prosperous. Business people would come from all over the world to place orders at factories here for clothing and shoes.

But now, this area is almost entirely abandoned. Shops like this one that used to cater to factory workers are completely shut down.

Lee had to idle his plant for 40 days over the summer because his inventory got too high. He`s also been battling rising costs. Higher minimum wage and rising living standards have forced him to offer pay races as much as 10 percent every year for the past five years to the current salary level of more than $1,000 a month for many of his workers.

"The main difficulty we are facing now is rising costs, especially for labor. This casts a huge shadow over our operation," he says.

The recent devaluation of the Chinese currency has helped narrow losses, but Lee only sees it as temporary relief.

"I`m afraid what we have seen of the slowdown is just the beginning and it`s far from the bottom," he says.

His survival strategy?


YOON: Praying for a miracle in China`s rapidly cooling economy.

China`s black gold, coal has been the lifeblood of the country`s growth. Now, its industry faces an uncertain future.

And trucker Li Anping is feeling the pain. Here in Changzhi province, Li and his fellow truckers used to earn $630 a month transporting coal. Today, only half that. Trucks are idled, partly because of China`s economic slowdown and for another reason.

"A lot of coal mines have shut down because of the environmental protection regulations," he says. Some other coal-related businesses have also closed because they failed to meet the government`s emission standards.

At the climate change meeting in Paris, President Xi Jinping reiterated his vow to rein in China`s carbon emissions to peak by 2030. As part of that pledge, Beijing is trying to wean itself off of coal, the fuel blamed most for emissions and pollutants.

Currently, China is the biggest consumer and producer of the fossil fuel. It`s also the biggest emitter of greenhouse gases.

China still relies very heavily on coal to power its economy, so the government here has pledged to upgrade its coal-fired plants nationwide to reduce pollution by 60 percent by 2020. It also is embracing clean energy.

It`s investing big in wind, solar and nuclear technologies. Still, critics point to Beijing`s days of hazardous smog this week as evidence that China`s addiction to coal will be hard to quit. It`s a cheap and plentiful source of energy difficult to resist, they say, for a government attempting to keep the economy from falling further.

Even so, trucker Li is concerned about his own prospects in the industry.

"Living expenses are rising and I have a whole family to take care of," he says. "I`m thinking of going abroad to find a job as a day laborer," away from China`s coal country and its clouded future.

For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Changzhi.


HERERA: So, will see improvement in the Chinese economy or will it continue to be a concern in the global markets?

Paul Christopher joins us head of global market strategist at Wells Fargo (NYSE:WFC) Investment Institute.

Welcome, Paul. It`s a pleasure to have you here.


HERERA: Let`s start first of all with where you think we are in the China cycle. Is there more down side to come? And if so, how much more significant to the downside?

CHRISTOPHER: Right. More down side to come in the sectors that your reporter mentioned. So, manufacturing, construction and mineral extraction. That`s deliberate. Part of it is the environmental protection and part of it is the realization that demand just isn`t there anymore for Chinese manufactured products.

But it also suits China in a very nice way, because they really want to develop more service sector growth and consumption. You heard the part about the higher wages. So, at the same time some sectors are correcting, others are growing, in fact services represent the fastest source of growth in the economy and largest source of employment growth.

MATHISEN: What, Paul, about China`s internal debt issues? They have a lot of loans to state-owned enterprises. They got real estate loans out there. Is their debt their real Achilles` heel?

CHRISTOPHER: Well, the debt is a very large overhang, but fortunately, it`s mainly internal. It`s not external debt. And so, the government is in the process of trying to re-denominate a lot of that.

So, the land debt, for example, that can be converted into local government bonds backed by the central government. There`s a lot of other means that they can use to keep that debt from going bad all of a sudden, which would be the real risk to the U.S. and the economy.

So, yes, it`s a big risk going forward, but there are ways to deal with it. More importantly, the economy is growing in the sectors the government is trying to promote. That should help keep stability, employment growth, wage growth and spending going, and that also helps keep the debt sustainable.

HERERA: There are predictions out there that China will once again depreciate its currency. Do you think they will and how dramatic would that be for the markets?

CHRISTOPHER: Well, at this point, the markets aren`t so much worried about depreciation, as they are sudden changes in policy by the People`s Bank of China. When the People`s Bank is unpredictable, as they were last week, that tends to make markets think that something is being hidden, perhaps some new slowdown in the economy that wasn`t previously discounted.

So as long as the rate of depreciation continues steadily, after all, the currency is overvalued and needs to catch up with other concurrencies in the world against the dollar, I think that steady rate will be largely benign, but it`s going to be those occasional flare-ups or hiccups that come from policy mistakes or miscues that will be the real issue.

MATHISEN: Very quickly -- for China, hard landing, soft landing or continued flight, albeit at a lower level?

CHRISTOPHER: I`d say 80 percent chance of a soft landing, with some hiccups along the way due to policy missteps.

HERERA: All right. On that note, Paul, thank you for joining us. We appreciate it.


HERERA: Paul Christopher with Wells Fargo (NYSE:WFC) Investment Institute.

MATHISEN: And coming up, some towns reap the rewards of strong oil demand. Now with prices in a freefall, a look at the fallout in with Texas town and how it might weather the downturn.


HERERA: Here`s what to watch for on Tuesday. Earnings season starts to shift into high gear with a pair of Dow components, IBM and UnitedHealth. More financials are out with Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC). And is the best S&P performer in 2015 Netflix (NASDAQ:NFLX)? That`s what to watch for tomorrow.

MATHISEN: Another blow to the markets as we start 2016. It`s a carryover from 2015, collapsing oil prices, both the domestic and global benchmarks are hovering around $30 a barrel.

Let`s put it in perspective. June 2014, Brent Crude prices, $114. That fall has had a positive impact at the pump for U.S. drivers, pushing down the cost of a gallon of gasoline. The energy information agency sees gas averaging just above $2 this year. That would be up from where I would buy it, about a buck 65.

But the fallout from cratering oil has been unmistakable. The instrument has undergone tens of thousands of layoffs, the most recent being BP`s 4,000 announce the last weeks. Globally, oil dependent countries like Saudi Arabia have said they will have a budget deficit, and have to cut back on some services. And even Russia has said it might have to revise its budget if prices continue to fall.

MATHISEN: And finally tonight, the oil boom of the recent past was a boon for several states` economies. But now, as crude prices have plunged, many of those boom towns are feeling the pressure.

Brian Sullivan heads to the Lone Star State and takes a look at one city and how it`s coping.


BRIAN SULLIVAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: For years, Texas has been a shining star of the American economy. Nearly 2 million people have moved to the state in the past five years. And Houston`s oil-fueled jobs boom is one reason why.

But as the new reality of lower prices sinks in, that growth at least in Houston, may be at risk.

MAXIMO TEJEDA, TEXAS TUBULAR PRODUCTS FOUNDER: This used to make 5 1/2 couplings.

SULLIVAN: Maximo Tejeda runs a company that makes pipes used for oil wells. He has had to lay off half his workers over the past year.

TEJEDA: We have had to go from over 1,100 employees to less than 530 now.

SULLIVAN: Houston is much more than just the old oil town it used to be. The city is diversified with medical, technology and manufacturing, all helping to power the economy to more than 3 million workers last year.

But make no mistake: Oil is still the blood that flows through Houston`s economic veins. And oil`s impact is felt across many parts of the economy especially housing.

DOUG GOFF, JOHNSON DEVELOPMENT CORP COO: We sold 2,500 homes in 2015. That`s down about 8 percent from 2014, which was a record year for us.

SULLIVAN: If housing slows, many of the construction jobs that come with it could also be impacted, which could also then hurt consumer spending as jobs are lost.

Nobody is predicting a lights going out on the Lone Star State anytime soon. But if oil prices do not recover, Texas and in particular Houston, could be in for a rough couple of years.

For NIGHTLY BUSINESS REPORT from Houston, I`m Brian Sullivan.


HERERA: And we thank you for watching this special holiday edition of NIGHTLY BUSINESS REPORT. I`m Sue Herera.

MATHISEN: And I`m Tyler Mathisen. Thanks from me as well. Have a great evening, everybody, and we`ll see you back here tomorrow.


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