New York, NY, Jan. 13-- The nation's unemployment rate held at 6% in December, according to the Labor Department, as employers cut over 101,000 positions, the sharpest decline in 10 months. As recently as last summer, economists were predicting that layoff announcements would slow by the fall and unemployment would bottom out and start to improve.
Analysts say the results point to a weaker job market than expected earlier, one that remains stagnant and isn't likely to get much better in the next few months.
"We're in a very flat period of the economy, where you get economic growth driven primarily by productivity gains," said John Silvia, chief economist for Wachovia Corp.
Companies are trying to get more out of existing workers, asking them to work longer and harder and only grudgingly investing in new equipment. Executives have been reluctant to add to staff, particularly at the end of 2002.
That reluctance to hire, and the potential for more layoffs, will stretch into the first part of the new year, Silvia and other analysts said.
In a recent survey of 800 U.S. and Canadian personnel executives, 52% said they anticipate layoffs at their companies this year. About 11% of those surveyed said they expect the cuts to affect more than one fifth of their workers.
About a third of those polled by human resources consultant DBM said their companies anticipate doing some hiring, including some of the firms that simultaneously plan to cut jobs.
While those hiring plans are somewhat encouraging, companies will be moving ahead slowly, stretching out the interviewing and job offer process, said Dale Klanfoth, regional vice president at DBM.
The sluggish job outlook reminds some analysts of a period during the early 90s, when the economy grew but the unemployment remained high in a so called jobless recovery.
"We are in a recovery, but it's Chinese water torture because it's so slow and therefore there's not a lot of action that can be taken," said Jeff Joerres, chairman and CEO of Milwaukee based Manpower, Inc., the nation's largest temporary staffing company. "We normally accelerate through this phase, but we're bogging down."
