U.S. jobless rate drops to 6.7%
U.S. employers added a scant 74,000 jobs in December, the fewest in three years. The disappointing gain ends 2013 on a weak note and could raise questions about the economy's recent strength.
The Labor Department says the unemployment rate fell from 7 per cent in November to 6.7 per cent, the lowest level since October 2008. But the drop occurred mostly because more Americans stopped looking for jobs. The government counts people as unemployed only if they are actively searching for work.
Stock futures fell after the report was released.
The slowdown in hiring could cause the Federal Reserve to rethink its plans to slow its stimulus efforts. The Fed decided last month to cut back on its monthly bond purchases by $10 billion. It could delay further reductions until it sees evidence that December's weak numbers were temporary.
Cold weather may have slowed hiring. Construction firms cut 16,000 jobs, the biggest drop in 20 months.
Still, December's hiring is far below the average gain of 214,000 jobs a month in the preceding four months. But monthly gains averaged 182,000 last year, nearly matching the previous two years.
The proportion of people working or looking for work fell to 62.8 per cent, matching a nearly 36-year low.
Many industries posted weaker gains or cut jobs. Health care cut 6,000 positions, the first cut in 10 years. That could raise questions about the impact of President Barack Obama's health care reform. Transportation and warehousing cut a small number of jobs, suggesting shippers hired fewer workers for the holidays. Government cut 13,000.
One bright spot was manufacturing. Factories added 9,000 positions, the fifth straight gain. Still, that's down from 31,000 in November. Retailers added 55,000 jobs.
Recent data have painted a picture of an economy on the steady rise. Exports hit a record level in November, lowering the U.S. trade deficit. Businesses have ordered more manufactured goods. Auto sales reached a six-year high in 2013.
Analysts now estimate that the economy expanded at a healthy annual rate of 3 per cent to 3.5 per cent in the October-December quarter. That's up from earlier forecasts of a 2 per cent rate or less. It would follow a strong 4.1 per cent growth rate reported for the July-September quarter.