After a smidgen of good economic news in November, the U.S. economy unexpectedly shed 85,000 more jobs in December, continuing a nearly two-year trend and keeping the unemployment rate at 10 percent.—JCL
The U.S. unexpectedly lost 85,000 jobs in December, supporting Federal Reserve forecasts that a labor market recovery will take time and making it more likely interest rates will stay near zero for the next six months.
Payrolls fell last month after a revision showed a gain of 4,000 in November, the first in almost two years. The median estimate of economists surveyed by Bloomberg News projected no change in December. The jobless rate held at 10 percent.
Stocks fell on concern the recovery may weaken, and Treasury yields and the dollar slid as traders increased bets the Fed will keep interest rates near a record low for “an extended period.” While job cuts have slowed, companies are holding back on hiring as they gauge the strength of the economic recovery and contend with tight credit.
“There is still a lot of caution about the recovery because of lingering credit-crunch effects,” said Jim O’Sullivan, chief economist at MF Global Inc. in New York, who forecast a payrolls decline of 100,000. “It’s just a matter of time, probably a month or two, before the trend in payrolls turns positive on a sustained basis.”