Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Tags: jobs | unemployment | labor | hiring

Job Growth Cools Slightly as Economy 'Just Muddling Through'

Friday, 04 January 2013 08:35 AM EST

U.S. employers kept their pace of hiring steady in December, falling short of the levels needed to bring down a still lofty unemployment rate and pointing to lackluster economic growth in 2013.

Other data on Friday gave stronger signals on the health of the economy, with the U.S. service sector activity expanding the most in 10 months.

Payrolls, excluding farm jobs, grew by 155,000 last month, the Labor Department said. That was a touch more than analysts' expectations and only slightly below the revised gain of 161,000 reported for November.

The jobless rate was steady at 7.8 percent.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

While firms kept on hiring despite the uncertainties raised by a budget stand-off in Washington, the report reinforced expectations of 2 percent economic growth this year.

Such slow growth is unlikely to quickly bring down the unemployment rate and probably will not make the U.S. Federal Reserve rethink its stimulus plan anytime soon despite growing unease among some policymakers over its bond-buying program.

"The U.S. economy is just muddling through," said Tom di Galoma, managing director at Navigate Advisors in Stamford, Connecticut.

The Labor Department raised its estimate for unemployment in November by a tenth of a point to 7.8 percent.

Most economists expect the U.S. economy will be held back this year by tax hikes as well as by weak spending by households and businesses, which are still trying to reduce big debts taken on before the 2007-09 recession.

Friday's data nonetheless gave signals of some momentum in the labor market's recovery.

Gains in employment were distributed broadly throughout the economy, from manufacturing to health care. The government also said 14,000 more jobs were created in October and November than originally estimated.

Average hourly earnings rose 0.3 percent last month, slightly more than analysts had expected, while the length of the average workweek edged higher.

"This shows the economy is chugging along," Tom Porcelli, an economist at RBC Capital Markets in New York.

A increase in the number of construction jobs in December may represent a one-time bounce from reconstruction efforts following a mammoth East Coast storm, but the fledgling recovery in America's housing market could also be behind the gains, said Michael Feroli, an economist at JPMorgan in New York.

Separately, the Institute for Supply Management said its services index rose to 56.1 last month, the highest since February. Another report showed a gauge of business spending plans remained firm in November.


U.S. stocks rose slightly and prices fell for U.S. government debt.

The ISM report showed much stronger levels of activity than analysts were expecting, fanning investor speculation that a strengthening economy could lead the Fed to scale back its bond buying programs.

Still, many analysts said hiring remains too weak for the U.S. central bank to consider taking its foot off the accelerator. The Fed has said it wants substantial improvement in the labor market before it eases up on its bond buying.

"There is nothing here to suggest the Fed will see indications of a 'substantial' improvement," said Julia Coronado, chief North America economist at BNP Paribas.

Taking the opposite view, Craig Dismuke, a strategist at Vining Sparks in Memphis, Tennessee, said the current pace of job creation could raise pressure on the Fed to stop bond purchases after the middle of the year.

On Thursday, minutes from the Fed's December policy review pointed to rising concerns over how the asset purchases will affect financial markets.


Despite the signs of some momentum in hiring, a wave of government spending cuts due to begin around March are looming over the economy.

Also threatening the recovery, the United States risks defaulting on its debt if Congress doesn't give the government permission within a few months to increase borrowing. White House economic advisor Alan Krueger told MSNBC the economy would do better if Congress promptly raised the debt ceiling.

The government's $16.4 trillion debt limit has become a poker chip in congressional talks over how to push scheduled spending cuts further into the future.

A last-minute deal this week softened the tax hikes and postponed the cuts by two months, and hiring in December may have been slowed by uncertainty over the timing of the so-called "fiscal cliff."

"Companies were very worried about the fiscal cliff, so it's a good number that they were still hiring," said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

Austerity already held back the U.S. economy in 2012. In December, government payrolls shrank by 13,000.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

© 2023 Thomson/Reuters. All rights reserved.

The pace of hiring by U.S. employers eased slightly in December, pointing to a lackluster pace of economic growth that was unable to make further inroads in the country's still high unemployment rate. Payrolls outside the farming sector grew 155,000 last month, the Labor...
Friday, 04 January 2013 08:35 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved