Exactly!! Because the 2.2 million jobs created in 2004 caused the 10 year to jump from about 4.27% to about ...errr... 4.22%. Never mind.
Posted on 02/03/2005 1:19:02 PM PST by RWR8189
WASHINGTON (Reuters) - The pace of U.S. worker productivity growth slowed at the end of 2004 and claims for jobless aid dipped last week, according to reports raising both job-growth hopes and inflation concerns.
Separate reports on Thursday tempered the optimism as growth in the huge U.S. services sector cooled a bit last month while factory orders rose a mere 0.3 percent in December.
Nonfarm business productivity, or worker output per hour, grew at an annual rate of just 0.8 percent in the fourth quarter, falling from the third quarter's 1.8 percent rate and the smallest advance since a drop in the first quarter of 2001, the Labor Department said.
The slowdown caused unit labor costs, a key gauge of inflation or profit pressures, to rise at a 2.3 percent rate, the biggest jump in 2-1/2 years and a step-up from the third quarter's 1.6 percent pace.
In a separate report, the department said initial claims for state unemployment benefits fell to 316,000 last week, matching a figure reached seven weeks ago as the second lowest since before the economy tipped into recession in 2001.
Financial markets will look closely at January employment data from the Labor Department on Friday for further clues on the labor market. Economists look for a healthy 190,000 gain in nonfarm jobs but Thursday's strong numbers had bond traders nervous the report could prove more robust than forecast.
Prices for U.S. government bonds slipped in the wake of the data and stock prices fell, while the dollar moved higher.
Wall Street had looked for jobless claims to rise to 330,000 and had forecast productivity growth to slow only a touch.
"Companies can't squeeze more out of their existing work force. They must hire," said Christopher Low, chief economist at FTN Financial in New York, in explaining the data.
NORMAL SLOWDOWN
For all of 2004, productivity grew a robust 4.1 percent -- capping an extraordinary three-year period in which it shot up faster than at any other comparable period in nearly 50 years of record-keeping.
Still, last year's advance marked a bit of a slowdown from 2003 and reflected year-over-year changes that moved progressively lower throughout 2004.
Fast productivity growth allows businesses to pad profits or boost pay without raising prices. As productivity slows, firms are forced to hire more workers and face smaller profits unless they can push up prices.
Economists said it was normal for productivity to slow as an economy moved away from a recovery phase, and that it was also natural for interest rates to move higher as well.
The Federal Reserve on Wednesday raised overnight lending rates by a quarter-percentage point for the sixth straight time, taking them to 2.5 percent. It said a "measured pace" of rate hikes should suffice to keep inflation at bay.
CLAIMS SHOW RECOVERY
Economists said the report on jobless claims suggested the pace of job growth could well quicken.
A four-week moving average of initial claims, which smooths weekly volatility to provide a better sense of underlying trends, fell by 10,250 to 331,500, the lowest level since the start of the year and the second lowest since November 2000.
In another upbeat sign for the labor market, the number of unemployed still on the benefit rolls after an initial week of aid dropped by 116,000 to 2.70 million in the week ended Jan. 22. The drop brought the four-week average for continued claims to its lowest since April 2001.
For the second week in a row, the department said the data appeared free of seasonal anomalies that had skewed reports over the holiday season.
"Recently the figures have been not only in the range we would expect for a decent job market, but maybe a little on the lower part of that range, suggesting maybe some additional momentum is picking up here," said Patrick Fearon, an economist with A.G. Edwards & Sons in St. Louis.
EASY DOES IT
In a third report, the Institute for Supply Management said its non-manufacturing index, which measures activity in the services sector, slid to 59.2 from a revised 63.9 in December.
The index indicated growth in the sector, which accounts for about 80 percent of the U.S. economy, remained solid, although the number fell short of the 61.3 expected on Wall Street.
In addition, ISM's employment index moved lower, tempering bond-market concerns that rapid hiring might lead to price pressures. The slim rise in factory orders also suggested the economy was not facing a near-term risk of overheating, economists said. (Additional reporting by Ellen Freilich in New York and Mark Felsenthal in Washington, Editing by Chizu Nomiyama, Reuters Messaging: tim.ahmann.reuters.com@reuters.net; e-mail: tim.ahmann@reuters.com; 1 202 898-8370))
Tommorrow is the big day: jobs data. If it is huge, that will be the end of the refi and mortgage market.
Regardless, Dims will still shout the "...more jobs lost since H. Hoover" BS.
LMAO! Because of globalism, companies not only don't need to hire workers, they need to get rid of workers. If you're a job seeker nowadays, you're screwed.
Estimates are for 205k, prior was 175k. 225k or above would crush the ten-year note, and with it spike mortgage rates.
Money is cheap right now. Citbank sent me a 1.99% credit card offer (transfer of debt). Much competition among mortgage lenders.
Good for most of you all. They just announced this week that MI has the highest jobless rate in the nation.
It also happened that some college released a study purporting to show why...
Wages here are too high, average $21.28/hr. AND, no surprise, our teachers recieve 18% more than most other states.
They did all but spell UNION wages.
Heck. they snagged some illegals here last summer and someone asked them WHY they came clear up here and the reply was, "Here we make 10/hr down there we only get $5"
And companies keep pulling out but Jennie Granholm can't sem to think of anything but more stuff stuffed into Detroit and more ways to tax the rest of us.
Exactly!! Because the 2.2 million jobs created in 2004 caused the 10 year to jump from about 4.27% to about ...errr... 4.22%. Never mind.
Never mind, indeed. Those jobs gained still leave us at a deficit vs. jobs lost from the Clinton recession. And we have had several downward surprises among those monthly numbers to keep the bonds cool about the economy. Also, inflation has been nowhere, thanks in large part to the dollar. A 300,000 number this morning would change a lot of minds.
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