United States: Payrolls growth decelerates sharply, unemployment falls
January 10, 2014
Non-farm payrolls grew by 74,000 in December, which was well below November's revised increase of 241,000 (previously reported: 203,000). The reading fell far short of market expectations of a 200,000 increase in payrolls.
The private sector is entirely responsible for new hiring, having added 87,000 jobs in November. The largest gains were registered in the retail sector and the professional and business services sectors. Meanwhile, the public sector lost 13,000 jobs.
The U.S. economy has recovered 7.6 million jobs since February 2010, which marked the trough in the labor market crisis. The economy still has roughly 1.2 million fewer jobs than it had during the January 2008 peak, despite the ongoing improvement in the past three years.
The unemployment rate - derived from a different survey - fell from 7.0% in November to 6.7% in December. The reading beat market expectations of no change. As a result, the unemployment rate now sits at the lowest level since October 2008. The drop in unemployment, which occurred despite payroll gains having been much lower than expected, is driven in part by the continuing decline in the labor force participation rate. The participation rate currently sits at 62.8%, the lowest level since 1978.
FocusEconomics Consensus Forecast panelists expect unemployment to average 6.8% this year, which is down 0.1 percentage points over last month's forecast. For 2015, the panel expects the unemployment rate to drop to 6.3%.
Author: Carl Kelly, Economist