(USA TODAY) -- Employers added 74,000 jobs in December as payroll growth slowed significantly after several months of solid gains.
the smallest number of job gains since January 2011. The unemployment
rate fell from 7% to 6.7%, lowest since October 2008, the Labor
Department said Friday.
The decline was mostly due to a drop of 347,000 in the labor force, or the number of Americans working or looking for work.
median forecast of 37 economists surveyed by USA TODAY was for a gain
of 205,000 jobs last month. Nearly a third raised their projections
after payroll processor ADP's survey this week showed businesses adding
238,000 jobs in December, the most in 13 months. Other surveys of economists pointed to gains of 197,000 to 200,000.
The Labor Department's report showed businesses added 87,000 jobs. Federal, state and local governments cut 13,000.
Job gains for November were revised to 241,000 from 203,000.
latest numbers mean the U.S. economy gained an average 182,000 jobs a
month last year, the same as in 2012, at least temporarily undermining
the view that the labor market has been picking up steam lately after
four years of tepid growth. For the year, employers added 2.18 million
jobs, slightly fewer than 2012's total of 2.19 million.
economists warn last year's totals could turn out to be different after
the Labor Department completes monthly and annual revisions to its data
in coming months.
Paul Ashworth of Capital Economics says severe
winter was the main culprit behind the disappointing job gains. In the
Labor Department's survey of households, 273,000 people said they were
not at work for some part of the month because of the weather, well
above the 166,000 long-term average, Ashworth notes. A drop of 16,000
jobs in construction payrolls supports that view.
(employment increase) way understates how the labor market really is,"
says Allen Sinai, chief economist of Decision Economics.
noting the sharp labor force decline, Sinai says, "It's still a weak
report." He partly attributes the small number of job additions and the
drop in the labor force to ongoing mismatches between open positions in
technology and other fast-growing fields, and the skills of unemployed
The low payroll gains increase the risk that the Federal
Reserve could leave its monthly bond purchases -- which are intended to
hold down interest rates and spur growth --unchanged at $75 billion this
month after starting to taper the program in December. The Fed took
that step amid signs that the economy was showing significant
improvement. But Ashworth says the economy and job market are still
trending upward and he expects the Fed to reduce the purchases by
another $10 billion at its January 28-29 meeting.
INTERACTIVE: Job growth forecasts
other labor market indicators were mixed in December. The average
workweek fell to 34.4 hours from 34.5 hours. Employers give existing
workers more hours before adding new employees. Average hourly earnings
rose two cents to $24.17.
A possible bright spot is that the
number of temporary employees increased by a solid 40,000. Companies
typically bring on contingent workers before adding to permanent staff.
wider measure of joblessness called the underemployment rate - which
includes part-time employees who prefer full-time jobs and those who've
given up looking for work, as well as the unemployed - was unchanged at
Retailers led job gains with 55,000. Professional and business services added 19,000 and manufacturers, 9,000.
payroll growth was weak across the board, with education and health
services, a reliable source of job growth even through the recession,
adding no jobs.
The economy and labor market have shown signs of
ratcheting higher recently after 4 ½ years of mostly sluggish growth.
Net job gains were over 200,000 from August through November, vs.
180,000 the first seven months of the year.
housing recovery and consumer spending all have picked up recently. A
recent budget deal in Congress that tempers federal spending cuts has
eased uncertainty among corporations, many of which are flush with cash,
igniting plans for more capital spending. And a falling trade deficit
has prompted many analysts to raise their estimates of economic growth
last quarter to more than 3% at an annual rate.
household wealth is near record levels and consumers have shed much of
the debt that hampered their spending after the Great Recession.
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