The U.S. Labor Department reported that the national unemployment rate fell to 9.4 percent, significantly better than economists expected, but only 103,000 jobs were added, significantly less than predicted. The private sector added 113,000 jobs, far below the optimistic 180,000 that some surveys projected.
At the same time, the U.S. Bureau of Labor Statistics, which compiles the numbers, revised its October and November numbers upward by 70,000. November’s original 39,000 new job count was increased to 71,000 and October went from 172,000 to 210,000.
The biggest improvements in December came in leisure and hospitality (47,000 job increase) and in healthcare (+37,000 jobs). Construction continued to shed jobs, losing 16,000 during the month, the largest loss among the industry sectors. Local government also continued to downsize, cutting 10,000 jobs.
Economists surveyed in the days ahead of the report from the Bureau of Labor Statistics had been expecting anywhere from about 140,000 to 175,000 new jobs in December and the unemployment rate to hold steady at 9.8 percent or decline slightly to 9.7 percent.
The estimates were bolstered by a mid-week report from payroll processor ADP, which said companies added 297,000 jobs during the month. The estimate was widely doubted as too optimistic, but it did fuel hope that today’s official report would show strong job growth.
After the report’s release, economists and analysts voiced their uncertainty about job growth. Most seemed to agree that the economy is headed in the right direction, if slowly, but companies will have to accelerate hiring substantially to cut the unemployment rate further and sustain the recovery.
The New York Times this morning quoted Steven Blitz, a senior economist for ITG Investment Research, saying, “The U.S. economy finally appears to be picking up steam and headed toward recovery.”
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Jeffrey N. Kleintop, chief market strategist at LPL Financial, told The Times the report was “not terrible” and said, “But there is no real job creation here.”
Marketwatch talked with Julia Coronado, chief economist for North America at BNP Paribas in New York, who said, “The economy is adding workers but there are no reliable signs the pace of hiring is improving.”
“We are staying on track,” she added, “but I’m not sure growth is set to accelerate.”
The BLS report shows that though the number of unemployed persons dropped by 556,000 to 14.5 million, the number of long-term unemployed and others were essentially unchanged. According to the report, 6.4 million people have been out of work more than 26 weeks. Another 8.9 million are working part-time because they have no other choice.
At least some part of the reason for the decline in the unemployment rate was that more people gave up looking for work in December. The government counts as unemployed only those persons who actively search for work during the survey period.