Jobless rate rises to 5 percent, highest rate since Nov. 2005, Slowest additions of jobs since August 2003 Options

[dauss]

http://www.msnbc.msn.com/id/22502713/

WASHINGTON - Hiring practically stalled in December, driving the nation’s unemployment rate up to 5 percent, a two-year high. The new figures fan fears the economy could slide into a recession.

Last month, employers added the fewest new jobs to their payrolls in more than four years, said the jobs report released Friday by the Labor Department. The report also showed that employment conditions are deteriorating, strained by a housing slump and credit crunch that are sapping economic strength.

The unemployment rate jumped from 4.7 percent in November to 5 percent in December, the highest since November 2005 after the Gulf Coast hurricanes dealt the country a mighty blow. Payrolls — both private employers and government — grew by just 18,000 last month, the worst showing since August 2003, when the economy suffered job losses as it struggled to recover from the 2001 recession.

The December employment picture was much weaker than economists were expecting. They were forecasting the unemployment rate to bump up to 4.8 percent and for employers to add around 70,000 jobs to their payrolls.

Employers have grown cautious as they try to cope with fallout from housing and credit problems and rising uncertainty about how the economy will fare in the months ahead. Galloping energy prices and bad weather in some parts of the country also probably figured into the weak job figures.

Manufacturers, construction companies, financial services all cut jobs in December - casualties of the housing slump. Retailers also sliced jobs.

The government added 31,000 jobs in December, while private employers actually cut payrolls by 13,000, underscoring the weakness.

For all of 2007, the unemployment rate averaged 4.6 percent, the same as last year.

The 5 percent rate is relatively low by historical standards. In the recession of the early 1980s, for example, the jobless rate reached double-digit levels.

Nevertheless, with the economy losing momentum, the White House and some economists at the Federal Reserve predict that the jobless rate will average 4.9 percent this year.

[impala454]

google -> "how unemployment rate is calculated" -> first hit = http://www.bls.gov/cps/cps_htgm.htm

Cat:

Some people think that to get these figures on unemployment the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs. But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed.

Because unemployment insurance records relate only to persons who have applied for such benefits, and since it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940 when it began as a Work Projects Administration project. It has been expanded and modified several times since then. As explained later, the CPS estimates, beginning in 1994, reflect the results of a major redesign of the survey.

There are about 60,000 households in the sample for this survey. The sample is selected so as to be representative of the entire population of the United States. In order to select the sample, first, the 3,141 counties and county-equivalent cities in the country are grouped into 1,973 geographic areas. The Bureau of the Census then designs and selects a sample consisting of 754 of these geographic areas to represent each State and the District of Columbia. The sample is a State-based design and reflects urban and rural areas, different types of industrial and farming areas, and the major geographic divisions of each State.

Each of the 754 areas in the sample is subdivided into enumeration districts of about 300 households. The enumeration districts, in turn, are divided into smaller clusters of about four dwelling units each, through the use of address lists, detailed maps, and other sources. Then, the clusters to be surveyed are chosen statistically, and the households in these clusters are interviewed.