Service Sector Grows Slightly, Jobs Remain Scarce
More of the same
Small positive signs of a slow recovery continued last quarter as the service sector of the economy grew slightly, primarily due to holiday sales. The increase was so slight that it created very few new jobs. Most of the growth involved calling laid-off employees back to work or replacing positions that had been cut. The Institute for Supply Management (ISM), a private trade group, reported that agriculture and retail led the way for the modest increase. ISM tracks 18 industries and reported that seven showed signs of growth. The overall service index for the quarter was 50.1, with an index of 50 or higher indicating growth. Although the growth was small, it is considered an indicator of a continuing slow recovery.
Less loss but not more jobs
The trend continued across most sectors of the economy with a slowing in the loss of jobs, but no measurable creation of new jobs. Most analysts expect the Department of Labor to report a slight increase in unemployment in December as compared to November. The December number is anticipated to be 10.1 percent up from 10 percent and the overall job loss is expected to be approximately 8000 jobs. A report from ISM echoed that trend showing a slower drop in its employment gauge, from 41.6 to 44, for the same time period. ISM’s employment gauge hasn’t risen in two years, but the fall is slowing. All of the numbers seem to be headed in a positive direction, but ever so slowly.
Isolated growth lends caution to optimism
The economic sectors reporting actual growth were finance, retail, insurance, and public administration. This marked the first time the overall sector has grown in 13 months. The retail gain was mostly due to the addition of temporary employees for the holidays. This holiday-hiring factor, combined with how small and isolated the gains actually were, adds to the cautious optimism of economic-trend analysts. None of the indicators was significant enough to spark strong positive reaction by any industry analyst. The increase in this sector does have an important impact, however, because the service sector constitutes 80 percent of all non-farming jobs in the United States.
Financial service sector shows signs of life
Postings for jobs in the financial service sector grew 19 percent in December as compared to the previous year, according to EFinancialCareers.com, an influential site catering to finance and accounting professionals. The growth continued to be in debt-related fields, accounting, and fixed income. New orders in these areas rose for the fourth straight month. The growth was slower in November, but new orders are expected to drive up prices and revenue. These increases are expected to create more jobs in the near future.
Manufacturing limps toward recovery
ISM reported that the manufacturing sector grew again in December for the fifth consecutive month. This is a positive sign for the economy, but does not carry the impact it once did. Outsourcing has moved most jobs in this sector overseas. Manufacturing’s recovery has more of an emotional appeal than much real help in rebuilding the economy.