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By Bob Willis
Jan. 4 (Bloomberg) -- Hiring in the U.S. slowed in December and unemployment rose to a 17-month high, signaling one of the last bright spots in the economy lost its luster heading into 2008, economists said before a report today.
Payrolls rose by 70,000 after increasing 94,000 in November, according to the median forecast in a Bloomberg News survey of 74 economists. The jobless rate probably rose to 4.8 percent from 4.7 percent.
The figures may heighten concern job and wage gains, which have sustained consumer spending even as fuel prices rose and home values fell, will cool this year. Another report may show service industries expanded at the slowest pace since March, a sign the housing slump is spreading throughout the economy.
``With employment slowing, we think the consumer will be much more sluggish this year than last year,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts. ``Employment growth is slowing in sympathy with the slowdown in the economy.''
Payroll forecasts ranged from gains of 34,000 to 106,000. The Labor Department report is due at 8:30 a.m. in Washington.
The projected December job gain would put the total employment increase for 2007 at 1.4 million, the smallest in four years. The jobless rate was 4.5 percent at the end of 2006.
The Labor Department today will also issue revisions covering the last five years to data for its household survey, which includes the unemployment rate. Benchmark revisions to the payroll figures will be announced next month.
Slowdown Intensified
The dollar rose against the euro today, gaining 0.3 percent to $1.4707 as of 6:48 a.m. in New York. It fell to $1.4781 yesterday, the lowest in five weeks.
The hiring slowdown became more pronounced as 2007 unfolded and the housing slump deepened. An average 94,000 jobs a month were generated in the six months to November, compared with 147,000 a month from January through May.
Residential construction started dropping at the start of 2006, weakening job growth as builders, mortgage companies and manufacturers reduced staff.
The collapse of the subprime mortgage market in July and August hastened firings at financial companies. National City Corp., Ohio's largest bank, said this week it would eliminate another 900 jobs, bringing total cuts to 3,400, or about 10 percent of its workforce, in one year.
The housing market ``corrected with a high degree of suddenness,'' Chief Executive Officer Peter Raskind said in an interview on Jan. 2.
Factory Cutbacks
Manufacturers are also cutting back as sales of building materials, appliances and furniture weaken, reflecting a 34 percent slump in combined new and existing home sales from their July 2005 peak.
Factory payrolls shrank by 15,000 workers last month, according to the survey median. That would bring manufacturing employment down by 186,000 for the year.
The Institute for Supply Management's non-manufacturing index fell to 53.6 in December from 54.1, the Tempe, Arizona-based group may report at 10 a.m., according to economists surveyed. A reading of 50 is the dividing line between expansion and contraction.
Factories already slowed. ISM's manufacturing index for last month fell to 47.7, the lowest since April 2003, the purchasers group said this week.
The world's largest economy grew at a 1 percent pace in the fourth quarter after expanding at a 4.9 percent rate the previous three months that was the strongest since 2003, according to the median estimate of economists surveyed last month. Growth for all 2008 was projected at 2.3 percent.
Bloomberg Survey
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Nonfarm Unemploy Manu ISM Non-
Payrolls Rate Payrolls Manu
,000's % ,000's Index
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Date of Release 01/04 01/04 01/04 01/04
Observation Period Dec. Dec. Dec. Dec.
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Median 70 4.8% -15 53.6
Average 68 4.8% -15 53.6
High Forecast 106 4.9% -5 55.0
Low Forecast 34 4.7% -25 51.0
Number of Participants 74 71 17 64
Previous 94 4.7% -11 54.1
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4CAST Ltd. 40 4.7% --- 53.4
Action Economics 70 4.7% -18 54.5
AIG Investments 85 4.8% --- 55.0
Aletti Gestielle SGR 90 4.8% -14 54.0
Argus Research Corp. 45 4.7% -15 55.0
Banc of America Securitie 80 4.8% --- 53.8
Bancolombia SA 60 --- --- ---
Bank of Tokyo- Mitsubishi 50 4.9% -10 54.9
Bantleon Bank AG 60 4.8% --- 54.5
Barclays Capital 80 4.8% --- 54.0
BBVA 88 --- --- 52.0
Bear, Stearns & Co. 75 4.7% --- ---
BMO Capital Markets 70 4.8% --- 53.5
BNP Paribas 65 4.8% --- 53.0
Briefing.com 75 4.8% --- 53.0
Calyon 90 4.7% --- ---
CEMEX 100 4.7% --- 54.0
CIBC World Markets 80 4.8% --- 51.0
Citi 70 4.8% --- 54.0
ClearView Economics 100 4.8% -15 55.0
Commerzbank AG 105 4.7% -5 53.0
Credit Suisse 40 4.8% --- 52.0
Daiwa Securities America 60 4.8% --- 52.0
Danske Bank 71 4.8% --- 54.5
DekaBank 75 4.7% --- 53.0
Desjardins Group 106 4.8% --- 53.7
Deutsche Bank Securities 50 4.7% --- 53.0
Deutsche Postbank AG 70 4.7% --- 54.0
Dresdner Kleinwort 40 4.8% -20 53.0
First Trust Advisors 65 4.8% -15 53.1
Fortis 70 4.8% --- 54.0
Global Insight Inc. 50 4.8% --- 53.4
Goldman, Sachs & Co. 50 4.8% --- 54.0
H&R Block Financial Advis 60 4.8% -20 53.0
Helaba 80 4.7% --- 52.0
High Frequency Economics 50 4.8% --- 52.0
Horizon Investments 85 4.8% --- 54.0
HSBC Markets 70 4.7% --- 53.0
IDEAglobal 65 4.8% -15 53.1
Informa Global Markets 65 4.8% -15 51.5
ING Financial Markets 60 4.8% --- 53.5
Insight Economics 65 4.8% --- 53.5
Intesa-SanPaulo 70 4.8% --- 53.5
J.P. Morgan Chase 50 4.8% --- 54.0
Janney Montgomery Scott L 74 4.8% --- 54.0
JPMorgan Private Client 75 4.8% -10 54.3
Landesbank Berlin 60 4.8% --- 53.0
Lehman Brothers 90 4.7% --- 54.5
Maria Fiorini Ramirez Inc 75 4.8% --- 54.5
Merrill Lynch 50 4.8% --- 53.0
Moody's Economy.com 50 4.8% -15 53.5
Morgan Keegan & Co. 34 4.8% --- ---
Morgan Stanley & Co. 40 4.7% --- ---
National Bank Financial 50 4.9% --- 53.5
National City Bank 42 4.7% --- 54.5
Natixis 60 4.8% --- 53.0
Nomura Securities Intl. 50 4.8% -25 54.0
PNC Bank 80 4.7% --- 53.8
RBS Greenwich Capital 100 4.7% -10 ---
Ried, Thunberg & Co. 50 4.8% --- 55.0
Scotia Capital 70 4.8% --- ---
Skandia 97 --- --- ---
Societe Generale 90 4.7% --- ---
Stone & McCarthy Research 90 4.8% -14 53.9
TD Securities 75 4.8% --- 53.2
Thomson Financial/IFR 50 4.9% --- 53.5
Tullett Prebon 65 4.8% --- 53.7
UBS Securities LLC 50 4.8% --- ---
University of Maryland 75 4.7% -15 54.8
Wachovia Corp. 70 4.8% --- 54.7
Wells Fargo & Co. 70 4.7% --- 55.0
WestLB AG 60 4.8% --- 53.5
Westpac Banking Co. 75 4.8% --- 53.5
Wrightson Associates 50 4.8% --- 55.0
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To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
Last Updated: January 4, 2008 07:04 EST
