US jobs picture little changed in December

The US continued to add jobs in December at the same modest rate as the past two years, underpinning the still frustratingly slow pace of reducing joblessness, according to official data released Friday. Last month the economy generated 155,000 jobs, and the unemployment rate held at 7.8 percent, around where the rate has been since September, Labor Department figures showed. Tepid economic growth and business reticence to hire as government leaders battled to the January 1 deadline to avert the economic crunch of the fiscal cliff meant that the employment situation registered little significant improvement in the final quarter of 2012. The number of jobs created was slightly lower than in November, and close to the monthly average for both 2011 and 2012 of 153,000. Analysts said the pace showed the economy is still generating enough fresh positions to only slowly pull down the jobless rate, which has crept down from 9.1 percent at the start of 2011 and 8.3 percent in January 2012. Commenting on the data, the White House gave the same interpretation it has put out for months: that the numbers are evident that the economy is continuing to heal since the 2008-2009 recession, but that "more work remains to be done." It said the legislation signed into law by President Barack Obama Wednesday to avert most of the tax hikes scheduled in the fiscal-cliff budget measures ensured that employers will continue to have incentives to invest and create jobs. "It is critical that we continue the policies that are building an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007," said the White House's chief economist Alan Krueger. As has been the pattern, the private sector was the source of employment gains, adding 168,000 jobs in December, while government authorities at the federal and local levels continued to trim payrolls, by 13,000. The total number of the officially unemployed was little changed over the last quarter at 12.2 million. The employment-to-population ratio, a measure of participation in the labor force, was at 58.6 percent in December, unchanged from a year earlier. It remained still much lower than the peak of 63.4 percent in December 2006, before the country plunged into financial crisis and then deep recession. The little-changed jobs picture lent support to the Federal Reserve's December move to explicitly tie its eventual policy tightening to achieving a lower unemployment rate of at least 6.5 percent. Frustrated by the slow pace of reducing unemployment and the persistently high number of the long-term unemployed, the Fed for the first time set benchmarks for inflation and joblessness to begin lifting interest rates off their near-zero level. Jim O'Sullivan, chief US economist at High Frequency Economics, said the December data was neither strong nor weak. "While a 150,000-170,000 per month trend in payrolls is far from booming, it is strong enough over time to keep the unemployment rate moving down," he said. Economist Robert Kavcic at BMO Capital Markets noted another solid 30,000 jobs gain in the construction sector, supporting the growing view that the US housing industry is entering a solid recovery phase. "Underlying momentum in home-building activity suggests that gains close to this magnitude in construction employment could be here to stay," he said. US markets showed little reaction to the new data, with the main indices hovering around the break-even line 30 minutes into trade.