US seasonally adjusted non-farm payrolls rose by 18,000 in December, the weakest job growth since August 2003, according to a survey of thousands of businesses. Job growth was revised up by a total of 10,000 in November and October. Economists were expecting payrolls to increase about 58,000 in December, according to survey conducted by MarketWatch. Private-sector payrolls fell by 13,000, the biggest decline in more than four years. A separate survey of households showed employment plunging by 436,000, marking the biggest decline in five years. The number of unemployed adults rose by 474,000, pushing the unemployment rate up to 5% from 4.7%.
The jobless rate had been under 5% for 25 consecutive months. The weak jobs report puts more pressure on the Federal Reserve to act aggressively to prevent a recession. Earlier in the week, the prescient Institute for Supply Management index fell below the break-even 50% mark, dropping to a nearly four-year low. The Fed is expected to cut its overnight lending rate by a quarter percentage point later this month to further stimulate the economy, which has slowed significantly with the collapse of the housing market and turmoil in the credit markets. The Fed’s hands are tied somewhat by worries about inflation, and the jobs report added to those worries. Average hourly earnings rose 7 cents, or 0.4% in December, more than the 0.2% gain expected. Earnings have increased 3.7% in the past year. (MarketWatch)
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