January 8, 2005 in Business

Hiring in 2004 hit fastest pace in five years

Leigh Strope Associated Press
 

WASHINGTON — Employers hired workers in 2004 at the fastest pace in five years, with overall payrolls rising by 2.2 million. December’s job growth was a bit lower than expected, with the unemployment rate holding at 5.4 percent.

President Bush called the numbers “very positive,” but economists weren’t quite so enthusiastic. One said the year went out “like a cow: beefy but docile.”

The Labor Department reported Friday that employers expanded their payrolls by a net 157,000 in December, bringing the year’s increase to the highest level since 1999. That year, 3.2 million jobs were created, based on a government survey of businesses. In 2003, there was a net reduction of 61,000 payroll jobs, the department said.

For the year, the average unemployment rate was 5.5 percent. That was the lowest since 2001, when the average annual rate was 4.7 percent.

Bush called the jobs report “a very positive set of numbers” that are proof the economy is growing.

With Friday’s report, Bush is close to closing the gap in job creation that has plagued him for some time. There are now just 122,000 fewer jobs than when he took office in January 2001.

Looking ahead, the Bush administration predicts the economy will create another 2.1 million jobs in 2005 — a figure that private economists say is respectable and beatable.

In the game of managing expectations, it’s a much lower estimate than a previous Bush administration forecast of 3.6 million new jobs this year.

“Job growth remains positive, but still stubbornly sluggish,” said Bill Cheney, chief economist at John Hancock Financial Services, calling the jobs market “decent, but uninspiring.”

In the report, last month’s 157,000 net increase in jobs in December was close to the 175,000 that economists were predicting, but barely enough to keep up with population growth. It came on top of the 137,000 net jobs added the previous month, which was revised 25,000 higher than the government initially reported.

The service sector continued to spark overall hiring in December, without help from retailers. The job growth was concentrated in the health care industry, which added a net 36,000 positions, and business and professional services, which hired a net 41,000 workers.

As the holiday shopping season got in full swing, retailers ended up shedding almost 20,000 jobs overall. Analysts note that the figures are seasonally adjusted and subject to big fluctuations during that time of the year.

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