Job growth slows significantly in December

6:19 AM, Jan 10, 2014   |    comments
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Employers added 74,000 jobs in December as payroll growth slowed significantly after several months of solid gains.

That's 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 347,000 drop in the number of Americans working or looking for work.

The 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.

The latest numbers mean the U.S. economy gained an average 182,000 jobs a month last year, the same as in 2012. For the year, employers added 2.18 million jobs, slightly fewer than 2012's total of 2.19 million.

However, 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.

Some 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.

A 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 13.1%.

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.

Manufacturing, the 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.

Meanwhile, household wealth is near record levels and consumers have shed much of the debt that hampered their spending after the Great Recession.

The encouraging news led the Federal Reserve last month to trim its $85 billion in monthly bond purchases, which are aimed at holding down interest rates and stimulating growth.

By Paul Davidson

USA Today

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