Morning Business Memo
Today's January jobs report gives us a one-month snapshot of the U.S. employment market. For 2013 as a whole, "we do think the trend is toward improvement," says Jim O'Sullivan, chief U.S. economist at High Frequency Economics. "It's across the board in terms of services and also the construction numbers as the housing sector comes back. I wouldn't count on manufacturing being very strong." The economy has averaged about 150,000 additional jobs a month in the past two years, not enough to rapidly reduce still-high unemployment.
Some experts say the relatively low workforce participation rate is a sign of continuing weakness. O'Sullivan argues that such concerns might be overblown. "As the population ages and more people get closer to retirement age, or at retirement age, there's a natural tendency for the participation rate to go down." As baby boomers hit their mid-60s, "I think that's an important reason why the workforce participation rate has fallen," he says.
The stock market is off to its best start to the year since the 90s. The Dow Jones index led the averages with a 5.8 percent gain for January, its best start to the year since 1994. The broader based S&P 500 rose nearly 5 percent. Stocks rallied in the first week of January, right after Congress reached a deal to avoid the "fiscal cliff." Three more pluses for the markets: the recovery in housing and auto sales; better-than-expected quarterly profits for many big firms; and signs of a comeback for the Chinese economy.
The two biggest players in the U.S. toy industry reported disappointing earnings. Barbie maker Mattel's 4th quarter profits fell 17 percent, compared with the year before. Sales rose 5 percent, slightly shy of Wall Street forecasts. Last week, Hasbro's 4th quarter numbers failed to meet expectations. The toy industry continues to struggle against the effect of technology, including smartphones, and tablets. U.S. retail toy sales fell slightly last year, to $16.5 billion from $16.6 billion the year before, according to the NPD Group, a market research firm.
Days after a federal appeals court said the Obama administration is setting overly optimistic production quotas for the struggling biofuels industry, the government has issued new standards that raise production estimates for 2013. New standards announced by the EPA require production of 14 million gallons of cellulosic biofuels made from grasses and woody material. That's up from an 8.7 million-gallon requirement in 2012, when actual production was near zero. An oil industry representative said EPA was ignoring the court ruling as it pursued an "absurd" mandate for biofuels. The administration has said increased use of biofuels could lower greenhouse gas emissions that contribute to global warming.
Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc
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