MUNCIE, Ind. --An increase of 378,000 jobs during the last month of 1998 virtually ensures a respectable growth rate for the U.S. economy for early this year, says a Ball State University economic analyst.

“Hiring by businesses, perhaps the surest signal of confidence in the short term future, was strong in December,” said Patrick Barkey, director of the Bureau of Business Research. “If 1999 is to be a year of economic slowdown, it will have to do the job all on its own.”

The major boost in net payroll employment by business establishment in December did get a boost from Mother Nature. The milder than normal weather for the month contributed to the 104,000 job jump in construction industries employment, he said.

This job increase will come at the expense of gains that would have come in the spring, Barkey said.

Much of the increase could simply reflect the long sustained boom in the industry itself, he said.

“New home sales continued at record rates at the end of the year, and with interest rates low and gains in personal income strong, there's no immediate prospect for a let up in sight,” Barkey said.
Other areas with employment expansion included:

• Services producing industries saw huge job gains in business services and transportation industries.
• Computer services with employment totals up 13.3 percent over the same period as last year.
• Finance, retail trade and government employers who also added to payrolls.

Barkey pointed out that among service providers, the giant health services industry was virtually alone in posting tepid job growth. The industry added 3,000 jobs in December, a 1.3 percent increase over the same time in 1997.

While most industries grew at the end of last year, the manufacturing sector suffered badly by shedding 13,000 jobs in December. About 272,000 manufacturing jobs have been lost in the U.S. since last March.

While the stock market and the public attention was diverted toward problems in politics and in the economic affairs of foreign nations, the job report makes it clear that the biggest problem facing the U.S. economy -- finding suitable workers -- has not eased, Barkey said.

The strong year-end hiring helped bring the unemployment rate back down to its low of 4.3 percent in December, he said.

“The national economy brings the script for a new year at a point very reminiscent of the years past,” Barkey said. “Until something reminds consumers and businesses that they are supposed to be spending less, and not more, the coming months look to provide us with more economic fireworks.”

(NOTE TO EDITORS: For more information, contact Barkey by E-mail at pbarkey@bsu.edu or by phone at (765) 285-5926.)