Unemployment Rate Drops to 9.4% in December

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Researched by Industrial Info Resources (Sugar Land, Texas)--The United States has been struggling to recover from the massive recession for quite some time, and while numerous economic indicators have pointed to recovery occurring slowly, the national unemployment rate has been one indicator that has refused to follow that trend. For over a year, the unemployment rate has stayed at 9.5% or higher, as more and more workers have become disenfranchised with the employment situation and given up on finding new work. However, the nation ended 2010 on a bright note with the unemployment rate taking a dive in December, dropping from 9.8% to 9.4%, the largest one-month decline since April 1998.

A total of 103,000 new jobs were added during December, which was barely enough to keep pace with population growth. But that hiring spree, combined with a large number of workers giving up on finding employment, drove the rate down for the month. Private employers led the way by adding 113,000 jobs for the month after a meager November, when only 50,000 jobs were added in that sector. Economists are hoping that drop in the unemployment rate, combined with the new payroll tax cut that goes into effect this month, will help boost the sagging morale of both employers and employees and begin a trend of hiring that will lower the national unemployment rate even further in the coming months.

The manufacturing sector added a modest 10,000 jobs for the month, while the construction sector continued to see hiring decline, losing 16,000 jobs. The big winners for December were the health care and social assistance sectors, which added a total of 37,000 jobs; the leisure and hospitality sector, which added 47,000 jobs; the temporary help services sector, which added 15,900 jobs; and the retail trade sector, which added 12,000 jobs. Mining sector employment continued to trend upward, adding 5,000 jobs, while the motor vehicles and parts dealers added 8,000 jobs. Transportation and warehousing also saw modest gains, with 8,000 jobs being created.

Spending also was higher than expected in December as the Power and Industrial Manufacturing industries both added some significant capital and maintenance spending. Overall, 475 capital or maintenance projects worth an estimated $14.7 billion began construction in the U.S. Of those projects, more than 200 were within the Power or Industrial Manufacturing industries, which accounted for almost $10 billion of that total spending amount for the month. The Food & Beverage and Mining & Minerals industries also had solid spending months, contributing $981 million and $935 million, respectively, to the total.

Four regions of the country saw significant spending during the final month of 2010. The West Coast accounted for just less than $5 billion of the total spending for the month, with 40 capital or maintenance projects. The Great Lakes region contributed $2.9 billion to the total, with 132 capital or maintenance projects. This was not unexpected, as many of the facilities in the Great Lakes region perform annual or semi-annual maintenance in December. The Rocky Mountains region ($2.1 billion) and the Southwest region ($2 billion) also were major players for the month.

Hopefully, as companies continue to increase spending in the coming months and fears of a double-dip recession dim, more hiring will follow. Later in the year, as a number of these capital projects reach completion, the nation is likely to see a surge in hiring within the manufacturing sector, which could lead to further reductions in the unemployment rate. Many analysts are predicting that monthly hiring over the next 12 months will be double that of last year, which will certainly help lower the unemployment rate, but also warn that the return to pre-recession highs will take some time to achieve. The recovery process is going to be long one, but it appears as though the country is heading down the correct path.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.