December Job-Creation Prediction: 130,000; DoL Data: 1,000

January 8, 2004 ( - Encouraged by a decent holiday shopping season, many economists had called for a robust amount of job creation in Friday's government report on the December employment picture. They were wrong - in a big way.

The US Department of Labor (DoL) said the number of non-farm sector positions barely inched up by 1,000 during 2003’s final month – hugely lower than the 130,000-payroll rise labor analysts had forecast. Not only that, but the DoL downwardly revised November’s job creation data to reflect 43,000 new jobs from the original 57,000.

The unexpectedly poor report – which apparently signals that the economy may still be struggling to turn a strengthening business picture into new hiring – reflected a 38,000 fall in new retail sector jobs, which the department said was due to less hiring than usual at general merchandise stores. Also, the long-troubled manufacturing sector was still troubled – shedding 26,000 jobs in December, the 41st month of declines.

The good news in the DoL data was that the unemployment rate fell to 5.7%, the lowest level in over a year and down from 5.9% in November. Ironically, the pundits also called that one wrong as well; they had forecast the rate to hold steady into December.

The data will likely reinforce expectations that the Federal Reserve will keep interest rates on hold at 45-year lows at its next policy meeting on January 27-28 and for some time into the future.