At The End Of 1998, The Economy Showed Gains In Retail Sales And
Employment; Inflation Remains Low
The latest set of economic reports show that the U.S. economy was in high gear in December.
Gains in employment and retail sales were impressive, while inflation and the jobless rate were
low.
The United States created 378,000 new jobs in December after adding 251,000 jobs in November.
Construction employment surged by 104,000 jobs thanks to unseasonably mild weather in most areas of
the country. Job losses in manufacturing slowed down to just 13,000 in December after falling by
272,000 since March. Even after factoring out the favorable weather effects and the sharp
59,000-person rise in government payrolls, the gain signals a pickup in the pace of economic
activity in the fourth quarter of 1998.
Despite global economic problems and sharply lower corporate profits, total non-farm payrolls
grew by 2.9 million jobs from December of 1997, a 2.3-percent rise and averaged 2.5 percent above
the 1997 level.
The nation’s unemployment rate dropped by one-tenth of a point to 4.3 percent in December,
matching the 28-year low set last April. In 1998, the jobless rate averaged 4.5 percent, down
sharply from 4.9 percent in 1997, the lowest since 1969.
Industrial Output Rises Throughout 1998; Unseasonable Weather Helps
Housing Starts
The price index for finished goods rose 0.4 percent in December after falling 0.2 percent in
November. The core index, which excludes energy and food, increased 1 percent in December. Consumer
prices edged up 0.1 percent in December, while energy prices fell 1.4 percent.
For all of 1998, the cost of living rose 1.6 percent, down sharply from 2.4 percent in 1997.
Core inflation was up 0.3 percent in December and 2.4 percent from a year ago.
Industrial output rose 0.2 percent in December and had the best quarterly gain in 1998.
Output rose 2.4 percent at an annual rate in the final quarter of 1998 as manufacturing production
surged 5.1 percent from just 0.4 percent in the third quarter. For all of 1998, industrial output
grew 3.7 percent, which is way below the 6-percent surge in 1997.
Housing starts jumped to 1.72 million at an annual rate from 1.64 million in November, helped
by favorable weather and low mortgage rates. For builders, 1998 was the busiest year in more than a
decade, with 1.616 million units started.
Despite Growth In Other Sectors, The Textile Industry Continues To
Post Disappointing Figures
In 1998, the textile and apparel industries did not fare well despite a robust U.S. economy.
Textile output declined 0.7 percent in December and 1.2 percent in November. For all of 1998, the
industry’s output was up only 0.4 percent after rebounding 3 percent in 1997.
The operating rate for textiles was left intact at 85.4 percent of capacity in December. In
1998, the industry operated at 83.0 percent of capacity, down sharply from 85.3 percent in 1997.
Shipments by textile manufacturers were off 0.8 percent in November following a 0.9 percent gain in
October. Inventories shrank 0.8 percent. As a result, the inventory-to-sales ratio in November was
unchanged from 1.57 in October.
The industry’s payrolls dropped 0.7 percent in December. In 1998, employment in textiles
averaged 596,000 jobs, which is down 3.2 percent from 1997. The unemployment rate for textile mill
workers jumped to 5.0 percent in December from 3.7 percent in November.
Sales for apparel and accessory stores declined 0.6 percent in December as warm weather held
down purchases of winter clothing.
For all of 1998, sales at apparel and accessory stores grew 5.4 percent, more than double the
2.3-percent gain in 1997.
Producer prices of textiles and apparel rose 0.1 percent in December after falling 0.2
percent in November. Prices jumped 0.4 percent for synthetic fibers and inched up 0.1 percent for
carpets, were flat for greige fabrics and for home furnishings, but fell 0.2 percent for processed
yarns and threads, and edged down 0.1 percent for finished fabrics.
February 1999
