WASHINGTON: A new government report showing US employers unexpectedly cut 85,000 jobs in December underscores the need for “responsible actions” to jumpstart job creation, the White House said on Friday.
Christina Romer, one of President Barack Obama’s top economic aides, said the report, though a setback from November, was consistent with the gradual stabilization of the labor market.
“It is important not to read too much into any one monthly report, positive or negative. It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains,” Romer said in a statement.
President Obama should move quickly in 2010 to win approval of long-delayed free trade agreements that would help create new US jobs without adding to the budget deficit, business officials said.
Business groups argue approval of free trade deals with South Korea, Colombia and Panama that have been on the shelf for several years now would give US exports a boost and help create jobs without more federal spending.
“The administration has been pretty clear in saying they’ve been working with the Panamanians, the Colombians and the Koreans to resolve the issues” blocking the pacts, said Doug Goudie, international trade policy director at the National Association of Manufacturers.
“I hope they’re able to move Panama, at the very least, early this year,” Goudie said.
The US unemployment rate held at 10 percent, the government said Friday in a report highlighting a slow and painful recovery from recession.
The Labor Department report on nonfarm payrolls was a disappointment to those hoping for job growth, which is critical to economic recovery.
The figure was far worse than the consensus expectation for no change in overall employment levels, and came amid a wide array of predictions ranging from steep losses to modest gains.
The unemployment rate meanwhile was in line with expectations, remaining near its highest level since the 1980s.
In revising data for prior months, the data showed a net gain of 4,000 jobs in November instead of a loss of 11,000 previously reported, the first positive month after 22 months of losses.
But the agency also revised its October estimate to show a loss of 127,000 jobs in October instead of 111,000.
Private economists said the news was disappointing but consistent with a gradually healing economy. “We’re getting a steady but very slow improvement in the job market,” said Robert MacIntosh, economist at Eaton Vance
“We are going to have to get used to a frustratingly high unemployment rate.”
“On the surface this was a disappointing report, especially since we did finally have a positive number in November,” said Joel Naroff at Naroff Economic Advisors.
“But the seasonal adjustments are difficult in this type of cautious environment and I wouldn’t be surprised if in January there was another job increase.”
Cary Leahey, senior economist at the research firm Decision Economics, called the data consistent with a still-sluggish economy. “The labor market is struggling and is stuck in the water,” he said.
“You are seeing gains in output and manufacturing because of liquidation of inventories... but we haven’t seen a decisive turn in the labor market.”
The world’s biggest economy expanded at a 2.2 percent pace in the third quarter after four quarters of decline in the worst recession in decades. Most analysts expect continued growth for the fourth quarter and 2010 but say recovery could be held back by unemployment, which hurts consumer spending and confidence.
“It is starting to look like those in the U-shaped recovery camp are in better shape than those in the V-shaped recovery camp,” said Ian Pollick, economics strategist at TD Securities.
“While the worst of the recession is likely over, the fact that the duration of unemployment remains rigid is a concern, though a silver lining is that we are likely to see net job creation assisted by census hiring in the first quarter of 2010.”
The December report showed the goods-producing sector shed 81,000 jobs including 27,000 in manufacturing and 53,000 in construction.
The services sector lost a modest 4,000 jobs, with a loss of 10,000 in retail offset by gains in education, health care and professional services. Government sector employment fell by 21,000.
Average hours worked, sometimes seen as a proxy for economic activity, was unchanged in December. Average hourly earnings meanwhile rose 0.2 percent.
The civilian labor force fell by 661,000 in the month, suggesting that more people are stopping their search for employment.
“The unchanged unemployment rate of 10 percent understates labor market slack, since labor force participation fell sharply,” said Sophia Koropeckyj at Moody’s Economy.com.