Payrolls up only 18,000 in December; jobless rate at 5%
WASHINGTON -- Hiring stalled in December as the nation's employers created a net 18,000 jobs and the unemployment rate jumped to 5% — highest level in two years, the Labor Department said Friday.
The dismal jobs report raised the specter of slower consumer spending and renewed fears of a recession, strengthening the case for the Federal Reserve to cut interest rates to stimulate the economy when it meets later this month .
Factories, construction firms and retailers shed workers during December, in part reflecting the deepening depression in the housing sector. The number of Americans without a job jumped 474,000 last month, to 7.7 million, pushing the unemployment rate from 4.7% to 5.0%.
By comparison, the number of unemployed workers in December 2006 stood at 6.8 million, and the jobless rate at 4.4%. Overall, employers created 1.3 million jobs in 2007, compared with 2.3 million in 2006. That's the slowest pace of job creation in four years.
For all 2007, the unemployment rate averaged 4.6%, same as last year.
December's 5% unemployment rate is relatively low by historical standards. In the recession of the early 1980s, for example, the jobless rate reached double digits.
Nevertheless, with the economy losing momentum, the White House and some economists at the Fed predict the jobless rate will average 4.9% this year.
Another report showed that the nation's service sector grew in December, but at a pace slightly slower than the month before.
The Institute for Supply Management said Friday that its index measuring performance in non-manufacturing industries slipped to 53.9 in December from 54.1 in November. It was the lowest reading since 52.4 in March.
A reading above 50 indicates expansion, while one below 50 shows contraction.
The downbeat reports are the latest data – following contracting manufacturing numbers and spiking oil prices this week – that the U.S. economy is losing steam. It comes as President Bush meets today with top economic officials, including Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, to discuss possible stimulus proposals to boost the economy.
Trending Reader Picks
ABC News Live