U.S. adds jobs, but jobless rate remains at 7.8%

People look for work at a job fair in San Jose, Calif., in July. On Friday the U.S. government revised the unemployment rates for two months in 2012. The rate for November, first reported Dec. 7, was revised up to 7.8 percent from 7.7 percent, and the rate for July was revised down to 8.2 percent from 8.3 percent.
People look for work at a job fair in San Jose, Calif., in July. On Friday the U.S. government revised the unemployment rates for two months in 2012. The rate for November, first reported Dec. 7, was revised up to 7.8 percent from 7.7 percent, and the rate for July was revised down to 8.2 percent from 8.3 percent.

— The U.S. economy rounded out a third consecutive year of job gains with another month of employment growth in December, the Labor Department said Friday.

U.S. employers added 155,000 jobs in December, a steady gain that shows hiring held up during tense federal budget negotiations. But solid job growth wasn’t enough to reduce the unemployment rate, which was 7.8 percent last month.

“The economy has now added private-sector jobs for 34 straight months, and a total of 5.8 million jobs have been added over that period,” Alan Krueger, the head of the White House Council of Economic Advisers, said of the jobs numbers in his White House blog.

For others, however, the report highlights a long road still ahead.

“The jobs deficit - the number of jobs lost since the recession officially began five years ago plus the number of jobs we should have added just to keep up with the normal growth in the potential labor force - remains nearly 9 million. At December’s growth rate the labor market will not fill in that gap until the end of 2021,” Heidi Shierholz, an economist with the liberal Economic Policy Institute, said in a statement Friday.

The unemployment rate for November was revised to 7.8 percent from an initially reported 7.7 percent. Each January, the government updates the monthly unemployment rates for the previous five years. The rates for most months don’t change.

In Arkansas, the unemployment rate was 7.0 percent in November, down from 7.2 percent in October. The December rate will be released later this month.

The Labor Department said hiring was stronger in November than it first estimated. November’s job increases were revised up 15,000 to 161,000. October’s increase was nearly unchanged at 137,000.

The “gain is perhaps better than it looks given that firms were probably nervous about adding workers with the ‘fiscal cliff’ looming,” said Paul Ashworth, an economist at Capital Economics.

Most stocks rose, with the Standard & Poor’s 500 index closing Friday at 1,466.47, the highest since Dec. 31, 2007. The Dow Jones industrial average rose 43.85 points to 13,435.21.

Hiring hasn’t been strong enough to quickly reduce still high unemployment. The job gains for December almost exactly matched the average monthly pace for the past two years. Hiring has been steady but modest as the economy has grown slowly since the recession ended more than three years ago.

For 2012, employers added 1.84 million jobs, an average of 153,000 jobs a month, roughly matching the job totals for 2011.

Robust hiring in manufacturing and construction fueled the December job growth. Construction firms added 30,000, the most in 15 months. That increase likely reflected hiring needed to rebuild after Hurricane Sandy and also gains in home building that have contributed to a housing recovery.

Manufacturers added 25,000 jobs, the most in nine months.

Other higher-paying industries also added jobs. Professional and business services, which include positions in information technology, management and architecture, gained 19,000. Financial services added 9,000 and health care 55,000.

Lower-paying industry sectors were mixed. Restaurants and bars added 38,000 jobs. Retailers cut 11,300 jobs, a sign that the Christmas-shopping season might have been sluggish. But those cuts followed three months of strong gains.

All the job gains last month came from private employers. Governments shed 13,000 jobs, mostly in school systems.

The stable hiring pace shows that employers didn’t panic during the high-stakes talks between Congress and the White House over tax increases and spending cuts that weren’t resolved until New Year’s Day.

That’s an encouraging sign for the coming months, because an even bigger federal budget showdown is looming. The government must increase its $16.4 trillion borrowing limit by around late February or risk defaulting on its debt. Republicans will likely demand deep spending cuts as the price of raising the debt limit.

Friday’s report did point to some weakness in the job market. For example, the number of unemployed actually rose 164,000 to 12.2 million. Approximately 192,000 people entered the work force last month, but most of them didn’t find jobs.

The unemployment numbers come from a government survey of households; the number of jobs added each month comes from a separate survey of businesses.

A broader category that includes not only the unemployed but also part-time workers who want full-time jobs and people who have given up looking for work was unchanged in December at 22.7 million.

Despite the still-modest job growth, the economy is showing signs of improvement. Layoffs are declining. And the number of people who sought unemployment aid in the past month is near a four-year low. Banks are lending a bit more freely.

The jobs report showed that hourly pay is staying slightly ahead of inflation. Hourly wages rose 7 cents to $23.73 last month, a 2.1 percent increase compared with a year earlier. Inflation rose 1.8 percent over the same period.

The once-depressed housing market is recovering. A measure of U.S. service firms’ business activity expanded in December by the most in nearly a year. And Americans spent more in November. Consumer spending drives nearly 70 percent of economic growth.

Manufacturing is getting some help from the best auto sales in five years. Car sales jumped 13 percent in 2012 to 14.5 million vehicles. And Americans spent more at the tail end of the Christmas-shopping season, raising overall sales that had slumped earlier in the crucial two-month period.

“There is little doubt that the seeds of faster growth are being planted,” James Marple, an economist at TD Bank, said in a note to clients.

But most economists expect little improvement in hiring this year. A 2 percentage-point cut in the Social Security tax expired Jan. 1, and the government may impose spending cuts this year.

Both the higher taxes and spending cuts, along with uncertainty about future budget fights, could restrain growth and hiring.

That “likely means acceleration in the labor market will remain elusive for the time being,” said Ellen Zentner, an economist at Nomura Securities.

Information for this article was contributed by Christopher S. Rugaber of The Associated Press, Kevin G. Hall of McClatchy Newspapers and Sobhana Chandra, Kristy Scheuble, Alex Kowalski and Chris Burritt of Bloomberg News.

Front Section, Pages 1 on 01/05/2013

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