Today’s report by the Labor Department that the unemployment rate fell by 0.4 percentage point – the biggest drop in a dozen years – to 9.4 percent is an encouraging sign for the economy and should be a boost to consumer confidence early this year. Also, the 70,000 jobs added in October and November due to revisions from previous reports is a positive signal that the labor market gained more momentum in the fourth quarter than previously thought. However, the fact that the economy created just 103,000 jobs in December shows that employers remain somewhat cautious in their outlook.
A closer look at the report shows that in December 80 percent of the private sector job growth was concentrated in just two sectors: leisure and hospitality and education and health services. In other sectors employment edged up just 22,000.
Manufacturing ended 2010 on a somewhat positive note gaining a modest 10,000 jobs and breaking a string of four consecutive monthly losses. This is consistent with a number of previous reports that showed manufacturing conditions improved last month. For the year overall, manufacturers expanded payrolls by 136,000 in 2010, the largest yearly gain since 1997. Still, after falling by 2.2 million during the previous two years, a much-more robust and broad-based economic recovery will be needed for manufacturers to make a more serious dent in the employment losses that occurred during 2008 and 2009.