US unemployment lowest in nearly 3 years
WASHINGTON — The US economy added more jobs in December and the unemployment rate fell again, but economists said big challenges remained to sustaining the jobs market recovery this year.
In a keenly awaited reading Friday, the Labor Department reported the jobless rate slipped to 8.5 per cent as 200,000 jobs were added last month.
The jobless rate was the lowest since February 2009, the month after President Barack Obama took office amid the worst US recession in decades.
The rate was 9.1 per cent as recently as August, and economists cheered the new numbers as evidence that economic growth, feeble throughout much of 2011, was gaining traction.
“This is the best possible type of report, as job creation in December was strong and the unemployment rate fell,” said Jason Schenker at Prestige Economics.
“This report provides further justification for continued modest optimism about the US economy in 2012,” he said.
Obama, whose political future could hang on how bad unemployment is by the time of November’s presidential election, welcomed the news.
“The economy is moving in the right direction. We are creating jobs,” he said, while urging Congress to keep supporting stimulus programs for the economy.
The report was stronger than generally expected. Analysts on average had predicted the jobless rate would instead rise, and weaker job gains of 150,000.
The number of unemployed people continued to trend down in December, to 13.1 million, after topping 14 million in mid-2011. Hourly wages and hours worked rose.
But the data showed the lingering deep strains in the labor market since the recession ended in June 2009.
Those counted as long-term unemployed — persons without a job for 27 weeks or more — barely budged at 5.6 million, or 42.5 per cent of the unemployed.
Other indicators were flat, including the labor force participation rate, unchanged at 64 per cent.
The private sector once again delivered the lion’s share of job gains, adding 212,000 in December.
The job gains were broad-based, with jobs added in transportation and warehousing, retail trade, manufacturing, health care, and mining.
However, analysts pointed out that the 42,000 messenger jobs added during the holiday shopping season would likely disappear in January.
Governments at all levels shed a net 12,000 jobs, a slower pace of layoffs amid strained budgets.
Some analysts cautioned that big risks remained in front of the long, slow jobs recovery.
“While this is a good report, we need more of them and they need to get a lot better if the economy is to start expanding strongly,” said Joel Naroff of Naroff Economic Advisors.
“Unfortunately, we need more like 300,000 jobs to get the unemployment rate coming down consistently and rapidly, and that is not likely to happen this year.”
He pointed to tensions with Iran over its nuclear problem, which could lead to higher oil prices, and to Europe’s public debt crisis. Both could hamper US growth.
IHS Global Insight’s Nigel Gault said that while the report was “encouraging,” the economy still faces “domestic headwinds” from the legacy of household and government debt.
“But the major threat remains external from slowing growth in the rest of the world and from the eurozone’s financial crisis,” he added.
A better jobs picture could boost Obama’s reelection bid. The Democratic president has backed government stimulus efforts to generate more jobs, while opposition Republicans have resisted, arguing that more government spending has been holding back private sector hiring.
Alan Krueger, the chairman of the White House Council of Economic Advisers, urged Congress to pass measures to ensure the recovery continues.
“It is critical that we continue the economic policies that are helping us to dig our way out of the deep hole that was caused by the recession,” Krueger said in a White House blog post.