The American Interest
Analysis by Walter Russell Mead & Staff
New Year's Job Report: A Recovery—If We Can Keep It

Our friends at the FT have brought us some good news for the new year: The private sector added more than 200,000 jobs in December, growing at a ten-month high, according to a monthly report by ADP. Even better, the number of job losses has fallen by more than 40 percent since November, nearing pre-recession levels:

“The overall pace of downsizing was at its slowest since the end of the recession. In fact, we have not seen this level of job cutting since before the dotcom collapse and subsequent 2001 recession,” said John Challenger, chief executive of Challenger, Gray & Christmas.

U.S. manufacturing and construction also posted modest gains after a dismal year. The FT reports that one manufacturing index rose from 49.5 to 50.7 in December; that’s better than November’s trough but still well below readings from earlier in the year:

The ISM surveys more than 300 manufacturing companies on employment, production, new orders, supplier deliveries and inventories. A reading below 50 indicates contraction in the factory sector. The manufacturing index is still well below the 54.1 reading seen in January 2012.

The forward-looking new orders component held steady at November’s level of 50.3, while the employment index rose to 52.7 in December from 48.4 the month prior and export orders increased to 51.5 from 47.

It’s still not clear how much of this is due to temporary holiday-season spikes and reconstruction after Hurricane Sandy. And, as always, it will take months of revisions and recalculations before more accurate job numbers emerge. Nonetheless, the trend is positive and the foundations for a stronger rebound are there if we play our cards right. Nothing to worry about there, of course; between them, Congress and the White House have everything under control.

Published on January 3, 2013 5:04 pm