Jobless claims up

WASHINGTON (AP) -- More people signed up for unemployment benefits last week, suggesting that the job market is softening as the economy loses speed.
The Labor Department reported Thursday that new applications filed for jobless benefits rose by a seasonally adjusted 12,000 to 346,000. It was a larger increase than economists were expecting. They were forecasting claims to rise to 335,000 last week.
The four-week moving average of new claims for unemployment benefits rose by 4,250 to 343,000 last week, the highest level in two years.
Economic growth in the October-to-December quarter is expected to slow to a near crawl - a pace of just 1.5 percent or less, according to economists' projections. The nation's unemployment rate, now at 4.7 percent, is expected to climb to 5 percent by early next year.

SHRM/Rutgers Report Paints Gloomy Picture of U.S. Services, Manufacturing

SHRM/Rutgers Report Paints Gloomy Picture of U.S. Services, ManufacturingWeaker employment growth is forecast in both sectors, potentially affecting hiring and pay.

By Garry Kranz

Bleak Business: Things are about to get worse for already gloomy U.S. manufacturing and services sectors. According to a report by the Society for Human Resource Management and Rutgers University, manufacturing and services companies will hire fewer new employees in December. Moreover, those fortunate to land jobs can expect to be offered lower pay than people hired at the same time last year. The index of manufacturing employment is forecast to drop to 27.6 percent in December, compared with 31.5 percent in December 2006. Salaried employees are expected to feel the brunt of the decline, which means they could see pay cuts, wage freezes or the elimination of their positions altogether.

Source: http://www.workforce.com/section/quick_takes/52570_3.html

Hiring Outlook Dims Slightly

MILWAUKEE (AP) -- Fewer than a quarter of employers expect to add positions in the first quarter of the new year, almost the same as a year ago, according to a survey of 14,000 companies being released Tuesday.
Twelve percent of companies said they expect to reduce employment in the three-month period starting in January, while 22 percent said they'll add jobs, according to the survey by Milwaukee-based global staffing firm Manpower Inc.
The numbers show a slight drop from hiring intentions during the same quarter last year, when 23 percent of employers said they'd increase hiring and 11 percent expected a decrease.
They also show more pessimism than last quarter, when 27 percent of employers planned to increase hiring and only 9 percent planned a decline.
But overall, they don't represent big changes, said Melanie Holmes, vice president of world of work solutions for Manpower.
"Employers anticipate only marginal changes compared to the previous quarter so I don't think we're going to be seeing anything dramatic," she said.
The majority of employers in the latest report - 60 percent - expected no change in hiring between January and March, while 6 percent of companies were unsure of their plans.
The survey continues a 16-quarter stretch of fairly strong hiring intentions, in which more than 20 percent of companies surveyed said they planned to add to their staffs.
Still, the quarterly survey conducted since 1962 shows employers in most of the 10 job categories it tracks expect to trim hiring from the same quarter last year, including manufacturing, education and services and public administration.
Construction companies expect one of the larger drops, with 23 percent of employers saying they expect to curtail hiring, compared with 16 percent in the same quarter last year. Seventeen percent of employers in this sector say they expect to increase hiring, down slightly from 18 percent last year.
Wholesale and retail saw a slight drop, with 21 percent of companies saying they planned to increase hiring, down from 23 percent last year. Eighteen percent plan a decrease, up from 17 percent last year.
In the finances and real estate sector, plans to increase hiring remained steady at 21 percent. But the number of companies in the sector that planned to hire less than last year grew from 7 percent to 9 percent.
Holmes said the survey doesn't ask why employers choose to increase, decrease or maintain their staffing levels. Attention to the mortgage crisis or possibility of a recession could be reasons, but the survey can't say for sure, she said.
"Nobody of course has a crystal ball and knows whether or not those things are going to happen, so it's not real surprising that some employers are going to be cutting back," she said.
Job growth by region was relatively stable, though the Midwest reported a drop from last quarter.
Nineteen percent of companies in the Midwest reported they would increase hiring in the first quarter, down from 26 percent during the previous one. Thirteen percent of companies were planning a decline, up from 9 percent last quarter.
The West continues to have the best outlook, with 29 percent of employers saying they planned to increase hiring, down from 33 percent last quarter. Eleven percent of employers said they planned to decrease hiring, up from 10 percent last quarter.
The South dipped slightly with 23 percent of employers expecting to increase hiring next quarter, down from 26 percent last quarter. Eleven percent expected to decrease hiring, up from 8 percent last quarter.
The Northeast also saw a dip, with 21 percent of companies saying they planned to increase staff, down from 25 percent last quarter. Thirteen percent of employers in that region said they planned a decrease, up from 10 percent last quarter.

Job Growth Higher Than Expected

NEW YORK (CNNMoney.com) -- Employers added fewer workers to U.S. payrolls in November, according to a closely-watched government reading on labor market strength released Friday that still came in a bit stronger than Wall Street expectations.
The net gain in payrolls came in at 94,000 in November, after a revised 170,000 gain in October. Economists surveyed by Briefing.com had forecast a 70,000 in workers in the latest reading. The September reading was revised lower.
The unemployment rate stayed at 4.7 percent reported for October. Economists had been forecasting a rise to 4.8 percent.
The jobs report is being particularly closely watched this month, as there have been mixed signs about whether the U.S. economy is at risk of falling into recession next year. Concerns about recession have raised expectations that the Federal Reserve will cut interest rates for the third straight time at its meeting Tuesday.

Jolly About Jobs Report

NEW YORK (CNNMoney.com) -- Stocks pointed to a higher open Friday after a key reading on the labor market came in better than expected, easing concerns that the economy is headed for a recession.
At 8:40 a.m. ET, Nasdaq and S&P futures climbed after the Labor Department said the U.S. economy added 94,000 jobs during the month of November.
The rate of unemployment held steady at 4.7 percent, the government said.
The numbers were roughly in line with expectations as economists were expecting employers to add 70,000 jobs last month, down from 166,000 in October. The unemployment rate was expected to rise to 4.8 percent from 4.7 percent in October.
Treasury prices retreated on the news as the yield on the benchmark 10-year note rose to 4.06 percent from 4 percent late Thursday.
Wall Street had been expecting a strong reading following a report from payroll processing firm ADP on Wednesday that showed a bigger surge in private-sector hiring than originally estimated.
The reading could further ease concerns about a recession in the U.S. and give stocks another boost, although those gains could be tempered because it would dash the hopes of some investors for the Federal Reserve to cut rates by a half-percentage point, also referred to as 50 basis points.
Stocks have rallied for the past two sessions on positive economic readings and bets that the Federal Reserve will cut rates at its policy meeting Tuesday.
Even with Friday's report Wachovia Chief Economist John Silvia said he could see the Fed cutting by a quarter percentage point due to continued problems in financial markets from this summer's meltdown in mortgage-backed securities.
In corporate news, smartphone maker Palm (Charts) saw shares plunge 21 percent in after-hours trading after it cut its second-quarter outlook and warned it will swing to a wider-than-expected loss due to a sales shortfall from the delay of a product launch.
Leading U.S. cell phone maker Motorola (Charts, Fortune 500) reaffirmed its earlier earnings guidance, but shares slipped narrowly in after-hours trading after initially gaining on the report.
Mortgage finance company Fannie Mae (Charts) on Thursday set a $25-a-share price for its previously announced plans for a $7 billion secondary stock offering next week, as it seeks to shore-up finances following losses on mortgage-backed securities. Shares of mortgage finance firm edged up 0.7 percent in after-hours trading.
Shares of insurer UnitedHealth Group (Charts, Fortune 500) slipped slightly in after-hours trading after former chairman and CEO William McGuire agreed to surrender more than $400 million to settle allegations related to a stock-options backdating scandal, the company and the Securities and Exchange Commission announced after the close Thursday.
The Wall Street Journal reported that General Motors (Charts, Fortune 500), Ford Motor (Charts, Fortune 500) and Chrysler all plan to cut back production in January of their full-size pickups, one of their most profitable products, as problems in the economy, especially home building, and new competition from Toyota Motor (Charts) cut into sales. The segment saw November sales down 8.3 percent when it released sales totals on Monday, worse than the 3.5 percent year-to-date decline.
Media conglomerate News Corp. (Charts, Fortune 500) announced that James Murdoch is the company's new chairman and CEO for Europe and Asia, suggesting that the 34-year old would most likely succeed his father, News Corp Chairman and CEO Rupert Murdoch, 76. James Murdoch, 34, had been CEO of British Sky Broadcasting Group, of which News Corp. owns 38 percent.
In global trade, Asia markets ended the session mixed while European stocks were mostly higher.
Oil prices, which crept back above $90 a barrel mark in trading Thursday, edged slightly lower in morning trading, with a barrel of light sweet crude falling 17 cents to $90.06.

Jobless Claims Reach Another High

A moving average for initial jobless claims reached its highest level since late October 2005, the government reported. The seasonally adjusted four-week moving average for initial jobless claims increased 4,750 to 340,250, according to the Labor Department. Initial jobless claims fell 15,000 to 338,000 in the week ended Dec. 1.

Source: CBS MarketWatch

The Global Fight For Top Talent

(Fortune Magazine) -- Three scenes from the new battle for global economic supremacy:
1. King Abdullah of Saudi Arabia, the country that sits on 25% of the planet's oil, knows that oil is not his country's future. That's why he's spending $12.5 billion to found a graduate research university, which he'll endow with $10 billion - as big an endowment on day one as MIT has built in 142 years. The point of this project, on a grand scale even by Saudi standards: to attract the best researchers in science and technology.
2. The European Union has proposed new rules to attract the world's most highly skilled workers. If they can show that they're well educated and hold an offer of a lucrative job in Europe, they can get a two-year renewable permit to live there. The problem Europe is trying to solve: 85% of emigrating unskilled workers from developing countries go to Europe, but only 5% of skilled workers do so.
3. HCL Technologies, an Indian infotech services firm, has noticed a major change in its best young employees. Until two or three years ago, few of them would work for it unless they were promised an overseas assignment. Now it's just the opposite: They see India as the most compelling source of excitement and opportunity, and they don't want to be sent away.
We've known for a long time that this day was coming, and now it's here: Countries are finally realizing that their future prosperity depends not on natural resources or even on financial capital, but on human capital. Companies have been battling for years to attract and keep the best people. Now countries are engaging in the same fight.
The contenders
It wasn't much of a scrap until recently. Only the United States, Western Europe, and Japan - for a while - were even contenders. They didn't beat up on one another too badly vying for the best talent because there was enough to go around. Their economies weren't sufficiently info-based to make talent as critical an advantage as it has become, and the economy wasn't sufficiently global for human-capital supremacy to be crucial. Now all those factors have changed; many countries are in the hunt, and they're all after the same thing.
Since this is a fundamentally new fight, no one is sure what will win it. But we can already identify some fairly deep and difficult questions the fight raises. How countries answer them will help determine national wealth and power.
How long will any country tolerate Info Age protectionism? Notice that Europe's new proposal to attract highly skilled workers is pretty pathetic. It doesn't really offer any attractions; it just scales back rules that keep those workers out.
We have similar rules in the United States, such as our skinflint distribution of H-1B visas and immigration rules that favor family connections over skills. Why do such rules exist at all? In the Industrial Age we protected manufacturing workers with tariffs and quotas, but we can't put duties on bits and bytes, so in the Info Age we protect knowledge workers by restricting immigration.
No country can have world-class workers if it continually protects them from world-class competition. Cisco CEO John Chambers, who is passionate on this subject, says, "Anyone with a college degree should be welcome to come to our country, with appropriate security checks."
The U.S. may be rich, but we hardly have the best education system
Why isn't the United States more serious about the key competitive advantage of the Info Age, education? How to make human capital more valuable is no mystery, yet the world's richest country still has nowhere near the world's best education system. That means trouble that will only get worse.
Stephen Roach, former chief economist of Morgan Stanley and now head of the firm's Asian operations, says, "In the U.S. we've squandered our advantage by not investing in educational reform."
What, ultimately, is a national economy? Is it good for a country if its companies prosper by offshoring high-value intellectual work? What if a nation's high-value employees are working in that nation for other nations' companies? Or if highly skilled immigrants perform high-value work and send their earnings home? The answers aren't obvious, but they are important.
This international fight for talent will get much more serious. With luck, it will lead to something new: a free market in brainpower. That may not come to pass- but wise nations will prepare for it.

White House Predicts Slower Growth

WASHINGTON (AP) -- The White House on Thursday lowered its forecast for economic growth for next year and said unemployment would rise as the housing slump and tight credit weigh on national economic activity.
Under the administration's new forecast, gross domestic product, or GDP, will grow by 2.7 percent next year. Its old projection called for a stronger, 3.1 percent increase. The unemployment rate, meanwhile, is projected to move up to 4.9 percent. That's up from a previous forecast of a 4.7 percent jobless rate. Inflation, however, should improve. The White House expects consumer prices to increase by 2.1 percent next year, a moderation from a previous forecast of a 2.5 percent rise.
"While the difficulties in housing and credit markets and the effects of high energy prices will extract a penalty from growth, the U.S. economy has many strengths, and I expect the expansion to continue," said Treasury Secretary Henry Paulson.
Economy best in four years
The odds of a recession have grown this year. But the Bush administration, Federal Reserve officials and others remain hopeful that one can be avoided.
The big worry for economists is that consumers and businesses will cut back on spending and investing, sending the economic growth into a tailspin. Spending by consumers and businesses is the lifeblood of the country's economic activity.
The White House's economic forecasts are issued twice a year. The projections were developed mainly by a team from the Council of Economic Advisers, the Treasury Department and the Office of Management and Budget. The administration's projections are in line with those offered by private analysts.

Manufacturing Stays Steady

NEW YORK (CNNMoney.com) -- The pace of manufacturing growth was little changed in November, according to a closely watched survey of executives in the sector released Monday that showed a pick-up in production even as manufacturers trimmed hiring plans.
The Institute For Supply Management's manufacturing index came in at 50.8, down from the 50.9 reading for October. Any reading above 50 indicates growth in the sector, while a reading below 50 indicates contraction. Economists surveyed by Briefing.com had forecast a 50.5 reading for November.
The concern that problems in the the real estate and credit markets would put a break on U.S. economic growth did not get a lot of support from this reading.
"While other segments of the economy are struggling, manufacturing continues to grow due to continuing strength in new orders, and a recovery in production from last month," said a statement from Norbert Ore, chair of ISM's committee that compiles the report.
Manufacturers were apparently being helped by a weak dollar making their goods more competitive, as they saw an increase in export orders. And they believe that their customers' inventories have fallen to levels that are too low to sustain business, which could suggest a pickup in new orders ahead.
The report showed 23 percent of those surveyed had a better rate of production, up from 18 percent in the October reading. But the percent who expected to have more employees dropped to 14 percent from 17 percent, while those looking to trim staffs rose.
While the reading just above 50 does indicate growth in manufacturing, the report is a bit below what is considered "average" growth in the sector, which would typically bring a reading closer to 53, said economist Robert Brusca. He said the employment reading and a drop in manufacturers' backlog of orders in this report indicates weakness in the sector.
"The U.S. economy is not an export-led economy," he said. "The exports we have don't take very much labor. It's not the thing to stop the economy from going into recession."
The ISM is closely watched as one of the first readings on the state of an important sector of the economy in the just completed month. This month is particularly important, given increasing signs of a slowdown in the U.S. economy and speculation about what the Federal Reserve will do with interest rates at its Dec. 11 meeting.
There are growing expectations among some investors and economists that the central bank could cut rates by as much as a half percentage point in an effort to keep the economy from falling into a recession. Hopes for a half-point cut are not helped by this report.
But there is still widespread belief that the Fed will cut rates by at least a quarter point, which would mark the third straight meeting at which it reduced rates.
The report showed a jump in prices paid by manufacturers for their raw materials, with 42 percent saying they were paying more, up from 33 percent a month ago. John Silvia, chief economist for Wachovia, said the report's prices paid component was a concern about building inflation pressures, even if it's not enough to stop the Fed from cutting rates on Dec. 11.
"For decision-makers, prices paid [is] a negative," he said. "Higher input prices put a squeeze on profits. Moreover, inflation concerns for the Fed will limit future easings. Rising chemical prices and energy prices are a particular concern."