Washington (AFP) – The U.S. added a paltry 74,000 jobs in December, in a slowdown in employment creation that put pause to hopes that the economy has moved into higher gear.
The Labor Department data released Friday was far below the 197,000 jobs economists had expected, and less than half the monthly average of the past 12 months.
While some analysts said a spate of harsh weather in parts of the country likely depressed hiring — construction jobs fell, for example, despite the rebound in the housing industry — others said the data was a signal to be cautious about optimistic forecasts.
The unemployment rate fell sharply from 7.0 percent to 6.7 percent, the lowest level since October 2008.
But that normally good news was largely explained by nearly 350,000 people dropping out of the workforce, rather than getting jobs.
“Clearly this latest news raises some uncertainty” about economic growth, said Paul Edelstein at IHS Global Insight.
The news threw expectations about the Federal Reserve’s just-launched program of cutting back its stimulus into question. U.S. bond yields and the dollar fell on expectations that the Fed could slow its monetary tightening timeline.
“Ultimately, the uncertainty surrounding the jobs market raises the possibility that the Fed might forego another taper move at its next meeting later this month,” Edelstein said.
“Instead, the Fed might choose to wait for another data point on the jobs market to see if December was an aberration.”
The news also added to the fight in Congress over whether the government needs to spend more to create jobs and support the jobless.
On Thursday Senate Democrats proposed legislation to restore long-term jobless benefits to people who lost them at the end of the year.