The nation’s unemployment rate fell to 9.4 percent last month, the lowest level since May 2009, after a year in which employers created more than a million jobs, the Labor Department reported Friday morning.
While the drop in unemployment was unexpectedly large, the number of jobs created during December was disappointingly small at 103,000 — barely above the average monthly rate of 94,000 seen during the full year 2010.
Other reports showing a fast-improving job market last month had led economists to predict the gain would be closer to 200,000 jobs, although about 70,000 more jobs were created in October and November than the department originally reported.
The big drop in the unemployment rate from 9.8 percent in November was as much the result of people dropping out of the labor force as it was people finding work. According to the department, 260,000 people left the labor force and apparently stopped looking for work during the month — a sign they were discouraged by the poor prospects for finding a job.
The 1.1 million new jobs that were created during 2010 — while a welcome revival following huge job losses of over 8 million during the recession — still fell far short of the number needed to employ the nearly 15 million Americans looking for work.
Economists expect the number of jobs to keep increasing steadily each month, but are unsure whether the pace will accelerate much this year.
“The job numbers suggest the recovery is sustainable and this should build up business and consumer confidence,” said John Silvia, chief economist at Wells Fargo Securities.
He noted that December’s job gains came in a wide swath of the economy, including retail, leisure, education, and health and professional services. Manufacturing also is experiencing a significant revival after deep job losses during the recession, he said.
But while that should help to feed steady gains in incomes and consumer spending, it is not the robust return of job growth that many citizens and political leaders are looking for, he said.
“Yes, we are getting more people employed, but we appear to be losing people into the woodwork — not a good sign long term,” he said.
Peter Morici, business professor at the University of Maryland, said the jobs report was disappointing. Most of the jobs created in the past year were in government-subsidized areas such as health care and social services, or were temporary positions in the business sector, he noted.
“Coming out of a recession, temporary jobs appear first, but 18 months into the expansion the pace of permanent, non-government subsidized job creation should be accelerating,” he said. “Instead, core private sector jobs rose only by 60,000 in December — the same as the monthly pace for 2010.”
Mr. Morici blames the sluggish job market on the nation’s trade deficit. As consumers buy nearly $60 billion in goods from overseas each month, they are fueling job gains in other countries, not in the United States, he said.
President Obama’s $800 billion stimulus package has helped some, and the bipartisan tax cut package passed last month should help some more, he said. But a lot of the money provided by Congress will continue to be spent on imports and will not prevent more jobs from being “leaked” overseas, he said.
• Patrice Hill can be reached at phill@washingtontimes.com.
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