The US economy created far fewer jobs than expected in December, suggesting the Federal Reserve will complete its asset buying program, but the unemployment rate dropped to its lowest in more than 1-1/2 years.
Non-farm payrolls increased 103,000, the Labor Department said today, below economists' expectations for 175,000. Private hiring rose 113,000, while government employment fell 10,000.
However, overall employment for October and November was revised to show 70,000 more job gains than previously reported. The unemployment rate fell to 9.4 per cent, the lowest since May 2009, from 9.8 per cent in November.
Economists raised their employment forecasts after payrolls processing company ADP Employer Services said on Wednesday private employers added 297,000 in December - the largest gain on ADP records dating to 2000.
"The labor market improvement is still way slower than what everybody would hope for," said Harm Bandholz, chief US economist at UniCredit Research in New York.
Federal Reserve officials will weigh the jobs report when they meet on January 25th and 26th.
Signs of strength in the economic recovery had led to calls for the US central bank to scale back its widely criticized $600 billion government bond-purchasing program aimed at keeping interest rates low to boost demand.
Some policymakers indicated in December they had a "fairly high" threshold for curtailing the stimulus program.
Employment gains in December were led by the private services sector, which saw payrolls rising 115,000 after gaining 84,000 in November. Retail jobs increased 12,000 after a surprise 19,400 slump in November when retailers reported their best sales in years.
Temporary hiring, seen as a harbinger of permanent employment, increased 15,900 after 31,100 in November.
The goods-producing sector shed 2,000 jobs in December after losing 5,000 in November, but manufacturing payrolls rose 10,000. Construction employment fell 16,000 after slipping 2,000 in November.
The average work week was steady at 34.3 hours. Average hourly earnings increased three cents in December.
Reuters