October 8, 2024

U.S. Economy Gains Steam as 200,000 Jobs Are Added

The United States added 200,000 new jobs last month, the Labor Department said Friday, a robust number that came on the heels of a flurry of heartening economic news. Consumer confidence lifted, factories stepped up production and small businesses showed signs of life. The nation’s unemployment rate fell to 8.5 percent, its lowest level in nearly two years.

It was the sixth consecutive month that the economy showed a net gain of more than 100,000 jobs — not enough to restore employment to pre-recession levels but enough, perhaps, to cheer President Obama as he enters the election year.

The sustained run of positives had economists like Markus Schomer, of PineBridge Investments, feeling much more optimistic than they did back in August, after a spring and summer of lost economic ground and a demoralizing debate over the debt ceiling.

At that time, Mr. Schomer thought, as many did, that government dysfunction was paralyzing the economy. Now, he is ratcheting up his growth forecast for 2012.

“The improving trend in the U.S. labor markets is not just a temporary blip, but seems to be something quite sustainable,” he said, adding that the improvement had come despite continued Washington gridlock.

Among the pieces of good news in Friday’s report: The drop in the jobless rate came largely from real gains, not from discouraged workers giving up the job hunt. The new jobs were spread broadly across industries, with transportation and warehousing, retail, manufacturing and restaurants all adding jobs.

In addition, average wages ticked up by 4 cents an hour, though over the year wages have not kept pace with inflation. And government downsizing, which has been a drag on the jobs numbers, slowed in December, with only 12,000 public jobs lost. The private sector added 212,000 jobs.

In another positive sign, the unemployment rate seemed to be dropping at a faster rate than the number of new jobs would imply, perhaps because new businesses and the newly self-employed are less likely to be captured by the Labor Department’s survey of businesses, from which the job numbers are drawn, than by its survey of households, from which the unemployment rate is calculated.

Economists continued to warn of potential dangers ahead, including disaster in the euro zone, increased tensions with Iran leading to higher gas prices, and the expiration of the Bush tax cuts. Congress may yet decline to continue extensions of the payroll tax break and unemployment benefits that have given spending a boost. Money, in the form of loans, is still hard to come by, and home prices have continued to fall.

There is also a sense of déjà vu, since hopes were similarly buoyed by good news last year at this time. Those hopes, Mr. Schomer pointed out, were soon dashed by the earthquake in Japan. “I’m a little bit concerned that Iran could be this year’s Japan,” he said.

Still, context is everything. The same modest upward trends that a few months ago were dismissed as far too anemic to do much are now being greeted with tentative praise. “People were very much thinking that the sky was falling,” said Tom Porcelli, an economist at RBC Capital Markets. “It’s no small victory that we’re up here, even with all these headwinds.”

Economists ventured to suggest that the good news and consumer confidence might feed off each other, leading to further increases in spending that, they hope, will be followed by the wage increases necessary to sustain that spending.

Bullish types were quick to trumpet the American economy’s resilience. “This is the real thing,” said Ian Shepherdson of High Frequency Economics. “This is finally the economy throwing off the shackles of the credit crunch.”

The Labor Department numbers were foreshadowed Thursday in a report by ADP, the payroll processing company, that showed a whopping gain of 325,000 private-sector jobs in December. ADP’s reports do not always correlate with the Labor Department’s findings, but they can provide additional insight. Diane Swonk, an economist with Mesirow Financial, said most of the new jobs in the ADP report were at small businesses and that generally only newer small businesses use a payroll company.

“It’s one of those things where you look at that and say, ‘That would be really cool if that continues,’ ” Ms. Swonk said. “It’s not just small business — it’s new business formation.”

Other factors, like seasonal adjustment, could be making the economy look better than it is. Seasonal adjustments are calculated based on the patterns of recent years. Because the recession began in December 2007, a drop-off at that time of year is now part of the pattern, and anything else looks better by comparison.

The seasonal adjustments may not wholly account for trends like online shopping, which boosted hiring of couriers and messengers by 42,000, a gain that economists expect to be reversed now that the holiday season has ended.

But there is more to the good news than statistical flukes, said Ellen Zentner, an economist with Nomura, pointing to the big jump in consumer confidence in December. “People do not feel more upbeat for no reason,” she said.

This article has been revised to reflect the following correction:

Correction: January 6, 2012

Because of an editing error, an earlier version of this article, and an e-mail alert, misstated the unemployment figure for November. Although it was initially given a month ago as 8.6 percent, it was revised Friday to 8.7 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=50f4d5ca0c79b305b8295c55778a5f01

Nokia to Eliminate 3,500 More Jobs

BERLIN — Nokia, the Finnish cellphone maker, said Thursday that it would eliminate 3,500 jobs, or 6 percent of its work force, by closing a factory in Romania and transferring production to more efficient plants in Asia.

The unexpected announcement, which sent Nokia’s shares up 2 percent in Helsinki, was the second wave of cuts this year from the company, a former global market leader, which began a 12 percent reduction in employee numbers in April.

The Nokia chief executive, Stephen Elop, described the Romanian plant closure as part of the company’s continuing effort to streamline production and meet consumer demand for smartphones, and to prepare for Nokia’s software collaboration with Microsoft.

“We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger,” Mr. Elop said in a statement. “We must take painful, yet necessary, steps to align our work force and operations with our path forward.”

Pete Cunningham, an analyst at Canalys, a research firm in Reading, England, agreed that Nokia was going through a period of unavoidable downsizing.

“The closure in Romania is unfortunate, but they have to streamline,” Mr. Cunningham said. “Over the years, they have grown really fat. Now they are in a process of trimming.”

“It is still going to be a couple of tough financial quarters ahead for Nokia,” he continued. “But we are hearing positive messages about their Windows Phone products.”

The company’s shares have fallen by half since Mr. Elop, a former Microsoft senior executive, announced in February that new Nokia phones would include the Windows Phone operating system by Microsoft.

The company’s decision to abandon Symbian, its proprietary operating system, caused some Nokia customers to balk at purchasing the soon-to-be obsolete models. Nokia responded by cutting prices on Symbian models, contributing to its €368 million, or $502 million, loss in the second quarter.

Nokia is expected to introduce the first of its models running the Windows Phone operating system at an investor conference in London on Oct. 26. Mr. Cunningham said he expected Nokia to present one or two new models at the event, probably high-end devices aimed at the year-end holiday season.

Mr. Elop said Wednesday that Nokia would be transferring the manufacture of the low-end phones made in Cluj-Napoca, Romania, to larger factories in China and South Korea, where Mr. Elop said production costs and economies of scale were more favorable.

The previous round of 7,000 job cuts, which is to be completed by the end of 2012, included the transfer of 2,800 employees to Accenture, a business technology consultant, next month.

With the new round of cuts, Nokia intends to shrink its devices and services work force, which stood at 59,150 at the end of June, by approximately 18 percent through next year.

In a separate announcement, Nokia said its former chief executive, Olli-Pekka Kallasvuo, had decided to leave the company and his position as nonexecutive chairman of Nokia Siemens Networks, its unprofitable network equipment venture with the German company Siemens.

Mr. Kallasvuo, who was the chief financial officer to Jorma Ollila, the chief executive who was the architect of Nokia’s early success, was succeeded by Mr. Elop last September after four years as chief executive. He then took charge of the equipment venture, for which Nokia and Siemens have been seeking new investors. The venture had a loss of €111 million in the second quarter.

Nokia said Mr. Kallasvuo would be succeeded by Jesper Ovesen, the former chief financial officer at TDC, the Danish phone operator, who was being appointed to help make Nokia Siemens a “more independent entity.”

To sustain the venture, which is under pressure from low-cost competitors like Huawei, the Chinese equipment maker, Nokia and Siemens on Wednesday agreed to each inject €500 million into the company.

In a statement, the companies said the €1 billion infusion was intended “to further strengthen the company’s financial position and set the stage for strategic flexibility, productivity and innovation in areas such as mobile broadband and related services.”

Article source: http://feeds.nytimes.com/click.phdo?i=6c4d45daa1de37a535a3aa2acdd7a2ac

Nokia to Cut 3,500 More Jobs

BERLIN — Nokia, the struggling Finnish cellphone maker, said Thursday that it would cut 3,500 jobs, or 6 percent of its work force, by closing a factory in Romania and transferring production to more efficient plants in Asia.

The unexpected announcement, which sent shares of Nokia’s stock up 1.2 percent in Helsinki, was the second wave of cuts this year from the former global market leader, which began a 12 percent reduction in April.

The Nokia chief executive, Stephen Elop, described the Romanian plant closure as part of the company’s ongoing effort to streamline production and meet consumer demand for smartphones, and to prepare for Nokia’s software collaboration with Microsoft.

“We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger,” Mr. Elop said in a statement. “We must take painful, yet necessary, steps to align our work force and operations with our path forward.”

Pete Cunningham, an analyst at Canalys, a research firm in Reading, England, agreed that Nokia was going through a period of difficult, but unavoidable, downsizing.

“The closure in Romania is unfortunate but they have to streamline,” Mr. Cunningham said. “Over the years, they have grown really fat. Now they are in a process of trimming. It is still going to be a couple of tough financial quarters ahead for Nokia. But we are hearing positive messages about their Windows Phone products.”

The company’s shares have fallen by half since Mr. Elop, a former Microsoft senior executive, announced in February that new Nokia phones would include the Windows Phone operating system by Microsoft. The company’s decision to abandon Symbian, its proprietary operating system, caused some Nokia customers to balk at purchasing the soon-to-be obsolete models.

Nokia responded by cutting prices on Symbian models, contributing to its €368 million, or $500 million, loss in the second quarter.

Nokia is expected to introduce the first of its phones running the Windows Phone operating system at an investor conference in London on Oct. 26. Mr. Cunningham said he expected Nokia to present one or two new models at the event, probably high-end devices timed for the holiday season.

Mr. Elop said Wednesday that Nokia would be transferring the manufacture of the low-end phones made in Cluj, Romania, to larger factories in China and South Korea, where Mr. Elop said production costs and volumes of scale were more favorable.

The earlier round of 7,000 jobs cut, which is to be completed by the end of 2012, included transferring 2,800 employees to Accenture, a business technology consultant, next month.

With the new round of cuts, Nokia intends to shrink its devices and services workforce, which stood at 59,150 at the end of June, by approximately 18 percent through next year.

In a separate announcement, Nokia said its former chief executive, Olli-Pekka Kallasvuo, had decided to leave the company and his position as non-executive chairman of Nokia Siemens Networks, its money-losing network equipment venture with the German company Siemens.

Mr. Kallasvuo, who was the chief financial officer to Jorma Ollila, the chief executive who was the architect of Nokia’s early success, was succeeded by Mr. Elop last September after four years as chief executive. He then took charge of the equipment venture, for which Nokia and Siemens have been seeking new investors.

The venture lost €111 million in the second quarter.

Nokia said Mr. Kallasvuo would be succeeded by Jesper Ovesen, the former chief financial officer at TDC, the Danish phone operator, who was being appointed to help make Nokia Siemens “more independent entity.”

To sustain the venture, which is under pressure from low-cost competitors like Huawei, the Chinese equipment maker, Nokia and Siemens on Wednesday agreed to each inject €500 million into the company.

In a statement, the companies said the €1 billion infusion was intended “to further strengthen the company’s financial position and set the stage for strategic flexibility, productivity and innovation in areas such as mobile broadband and related services.”

Article source: http://feeds.nytimes.com/click.phdo?i=6c4d45daa1de37a535a3aa2acdd7a2ac