Services Still the Backbone of Job Growth, Data Shows

Employers added 155,000 jobs in December, approximately matching the solid but unspectacular monthly rate of the last two years.

Companies increased their orders in November for manufactured goods, reflecting investment plans, even though total orders were unchanged for the month, the Commerce Department said in a second report.

Back-to-back increases in core capital goods followed a period of weakness that raised concerns about business investment, which has been a driving force in the economic rebound.

Analysts say they think that companies will increase spending on computers and other equipment to expand and modernize now that Congress and President Obama have reached a deal on taxes, removing uncertainty that had been weighing on business investment.

In a third report, a gauge of service companies’ activity expanded in December by the most in nearly a year, driven by an increase in new orders and hiring, a trade group said.

The industry group, the Institute for Supply Management, said its index of nonmanufacturing activity rose to 56.1 in December from 54.7 in November. It was the highest level since February and above the 12-month average of 54.7. Any reading above 50 indicates expansion.

Companies had a “year-end surge” in orders, in the words of one executive surveyed by the institute.

Services have been a crucial source of job growth, creating about 90 percent of the net jobs added since January. For all of 2012, the economy added 1.69 million service jobs, about the same as in 2011. Many of the new jobs are in low-paying retail and restaurant industries. The increase conflicted with a Labor Department report Friday that said the economy added just 109,000 service jobs last month, the fewest since June. One important difference between the two reports is the inclusion of construction jobs in the institute’s index. The government index excludes that category, which would have raised the December total by 30,000.

The institute’s report measures service growth in industries that cover 90 percent of the work force, including retail, construction, health care and financial services.

Article source: http://www.nytimes.com/2013/01/05/business/economy/services-still-the-backbone-of-job-growth-data-shows.html?partner=rss&emc=rss