MUNCIE, Ind. -- For thousands of companies that have prepared their business plans for 1999, the tests of their predictions for the economy are starting to arrive, says a Ball State University economic analyst.

The latest news on U.S. payroll employment provides the first read on how the economic momentum of last year has carried into January 1999, which isn't as good as originally thought, said Patrick Barkey, director of the Bureau of Business Research.

Business payrolls grew by 245,000 jobs in January, according to the Bureau of Labor Statistics (BLS), slightly higher than the 234,000 average monthly growth experienced over the course of 1998. The January job growth almost exactly matched the average rate of job expansion in the fourth quarter of 1998, when overall economic growth, as measured by Gross Domestic Product (GDP), was estimated to be a brisk 5.6 percent.

However, the big surprise in the January job report is what it said about December. Last month, a big surge in construction employment helped fuel a 378,000 job increase in December employment, according to the preliminary estimates, Barkey said.

"That booming growth, together with the report of rapid expansion in GDP in the fourth quarter, painted a picture of an economy that was accelerating markedly towards year's end," he said. "But now BLS says that job growth in December was a bit more restrained, revising its original estimate of growth down to 298,000 jobs. That's still a very respectable rate, but one that registers a little less brightly on policymakers' radar screens."

Barkey pointed out these shades of gray are important, because it's a safe bet that not too many business plans made last year were calling for a Federal Reserve interest rate hike in 1999.

Yet the fear of a growth burst straining the capacity of the economy was making the whispers of those who feel the economy is growing too fast to grow louder. The more restrained picture portrayed in the January report should ease those fears, at least for the moment, he said.

"There was little else in the report that was surprising, but that in itself is remarkable," Barkey said. "The 48,000 job increase in January business services will not grab any headlines, because this only represents an average performance for this fast growing sector."

In three years, companies in these industries have added almost two million new jobs and now have payrolls that are more than 25 percent bigger than in January of 1996, he said.

The strong growth in the services-producing side of the economy was in contrast to the sluggishness experienced in the goods-producing industries. Durable manufacturing payrolls, in particular, continued the slow slide that began early last year, posting a 10,000 job loss in January, Barkey said.

There was also very little change in unemployment rates in the U.S. in January, holding steady at 4.3 percent. This remarkable outcome is also, in the light of the economy's recent performance, unsurprising. Yet the steady gains in employment have helped push the employment to population ratio up to 64.5 percent in January, a record high, he said.

Barkey said the December figures for unemployment in Indiana, released by the Department of Workforce Development, are, in a similar fashion, both amazing and unsurprising. "The state's jobless rate held steady at a seasonally adjusted rate of just three percent at the close of last year, equalling its average for the entire 12 months of 1998," he said. "The state entered the new year with a lower fraction of idled workers than at any time in the last 30 years."

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