January 27, 2003,
Housing market broaches 16-year high
Undaunted by a soft economy and sluggish consumer spending, the broad U.S. housing market remains resilient, and housing starts rose by five percent in December, climbing to their highest level in 16 years, the Commerce Department reported.
The biggest gain was recorded in the Northeast, where starts rocketed up by 18.2 percent. Starts in western states rose by 9.8 percent, followed by a 4.0 percent increase in the Midwest, and a small 0.6 percent increase in the South. Building permits, a key gauge of home-builder builder confidence, also raced ahead in December, surging by 8.2 percent above November levels, to a seasonally adjusted 1.88 million. Permits were up by 10.5 percent over December 2001 levels. Permits for single-family housing rose by 2.5 percent above the November level.
Down-sizers take another breather
The pace of corporate down-sizing slowed for a second straight month in December, as the nation's big employers announced plans to lay off 92,917 workers, down more than 41 percent from the 157,508 job cuts announced in November.
In its monthly job cuts report, Challenger, Gray & Christmas, an international outplacement firm based in Chicago, said December layoffs were 42 percent lower than the 161,584 job cuts announced in December, 2001, in the aftermath of the Sept. 11 terrorist attacks on New York and Washington.
It was also the ninth time during 2002 that job cuts were lower than the same month the year before.
But don't start feeling good just yet, Challenger cautioned. Layoffs may be down, but the total of 1.466 million jobs cut in 2002 was the second largest annual total on record "a fact which undoubtedly contributed to consumer confidence levels falling to a nine-year low in the latest reading." Said the company.
Even so, 2002 job cuts were still down by 25 percent from the record 1.957 million layoffs of the year before.
"The drop below 100,000 in December is not much to celebrate nor is it an indication of a downward trend," said John A. Challenger, ceo. "To put it in perspective, in 1998, the heaviest job-cut year prior to 2001, the monthly average was 56,483."
Exacerbating the picture, said Challenger, tech spending and capital spending are not expected to rebound this year. Challenger pointed to a survey by the Business Roundtable — which counts among its members 150 ceos of the nation's largest companies — in which 80 percent said they will hold the line, or cut, capital spending in 2003. "This will most certainly stunt job creation," said Challenger. "The same survey found that 60 percent of the ceos expect their companies to eliminate jobs in 2003, so it is far too early to forecast a turnaround in the job market."
Companies find more mistakes
Spurred by increased scrutiny of corporate books in the wake of Enron, WorldCom and other accounting scandals, the number of companies restating their financial statements due to accounting errors jumped to a record high last year, said a study by the Huron Consulting Group.
In 2002, 330 companies restated their figures, said the study, up 22 percent form the prior year. A sweeping corporate reform laws passed last summer also helped to fuel the increase. The number of restatements filed in the five months after the Sarbanes-Oxley bill was made law was sharply higher than during the previous seven months.