US payrolls up 200,000 as jobless rate hits three-year low of 8.5pc
Published 07/01/2012 | 05:00
PAYROLL growth in the US beat forecasts in December and the unemployment rate dropped to the lowest level in almost three years as the economy gained strength heading into 2012.
The 200,000 increase followed a revised 100,000 gain in November that was smaller than first estimated, Labour Department figures showed yesterday in Washington. The jobless rate unexpectedly fell to 8.5pc, while hours-worked and earnings climbed.
"You got the trifecta -- more people working, wages up and the average work week up," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who accurately forecast the December payrolls gain. "You can't really argue that that isn't a sign of significant improvement in the job market."
Sustained hiring is needed to support the household spending that accounts for about 70pc of the world's largest economy. Yesterday's report follows gains in manufacturing and consumer sentiment that suggest the US is withstanding the economic crisis in Europe.
Stocks and Treasury yields fell after president of the Federal Reserve Bank of New York William C Dudley said the outlook for unemployment remained "unacceptably high" relative to the Fed's goals. The S&P's 500 Index was down 0.1pc to 1,279.65 in early New York trading. The yield on the 10-year Treasury note fell to 1.96pc from 2pc late on Thursday.
The unemployment rate, derived from a separate survey of households, was forecast to climb to 8.7pc from a previously reported 8.6pc in November. The November rate was revised to 8.7pc.
Private hiring, which excludes government agencies, rose 212,000 after a revised gain of 120,000 in November. It was projected to climb by 178,000, the survey showed.
Retail trade payrolls climbed 27,900 as companies kept hiring for the holiday shopping season. Among companies planning to take on more staff as consumer demand strengthens is Fort Worth, Texas-based Pier 1 Imports Inc.
"Sales are robust, merchandise margins are strong, operating margins are growing," Chief Executive Officer Alexander Smith said on a December 15 conference call with analysts. "There's going to be a little more hiring in the first part of the year without a doubt."
The top economist for President Barack Obama, Alan Krueger, said the gain in jobs showed the economy was moving in the right direction and called for an extension of the payroll-tax cut for all of 2012.
"We're digging our way out of a very deep hole," Mr Krueger, chairman of the White House Council of Economic Advisers, said.
"The tide is beginning to come back in," James Glassman, senior economist at JP Morgan Chase in New York, said in a radio interview on 'Bloomberg Surveillance' with Tom Keene and Ken Prewitt. "We've got a long way to go. This is all positive, though, that we're actually moving forward, and that's an important trend."
The New York Fed's Mr Dudley, in a speech today to bankers in Iselin, New Jersey, said the central bank still needed to consider monetary-policy easing. (Bloomberg)