WASHINGTON: US employers hired the fewest number of workers in almost three years in December, but the setback was likely to be temporary amid signs that unusually cold weather may have had an impact.
The surprisingly weak job growth figures reported by the Labor Department yesterday, however, complicated the picture for the Federal Reserve, which last month announced plans to scale back its massive monetary stimulus program.
Nonfarm payrolls rose only 74,000 in December, the smallest increase since January 2011 and well short of the 200,000 jobs or so that most economists had expected.
The unemployment rate fell 0.3 percentage point to 6.7 percent, its lowest level since October 2008, but the decline mostly reflected people leaving the labour force.
“If there ever there was a curveball, this was it,” said Marcus Bullus, trading director at MB Capital in London. “These limp numbers are as puzzling as they are surprising.”
US stocks rose at the open, as investors appeared to discount the data as being distorted by weather, but later slumped into negative territory. Prices for US Treasury debt rose and the dollar slid as some traders scaled back bets on how quickly the Fed might close the monetary spigots.
The step back in hiring is at odds with other employment indicators that have painted an upbeat picture of the jobs market. Tempering the blow, the government’s survey of employers found that 38,000 more jobs were added in November than previously reported. Construction employment fell last month for the first time since May and leisure and hospitality payrolls rose only marginally, suggesting that extremely cold weather in some parts of the country had held back hiring. In addition, transportation payrolls recorded their first decline in five months.
The smaller survey of households from which the jobless rate is derived showed 273,000 people stayed at home because of the bad weather, the most since 1977.
But the impact on the payrolls data should have been muted as anyone who worked at all during the pay period that included the 12th day of the month would have been counted as employed.
Reuters
