US economy creates fewer jobs than forecast

City A.M. Reporter
The US economy created far fewer jobs than expected in December, but the unemployment rate dropped to its lowest in more than 1-1/2 years.

Non-farm payrolls increased 103,000, the Labour Department said, below economists' expectations for 175,000. Private hiring rose 113,000, while government employment fell 10,000.

However, overall employment for October and November was revised to show 70,000 more job gains than previously reported. The unemployment rate fell to 9.4 per cent, the lowest since May 2009, from 9.8 per cent in November.

Economists raised their employment forecasts after payrolls processing company ADP Employer Services said on Wednesday private employers added 297,000 in December – the largest gain on ADP records dating to 2000.

"The labour market improvement is still way slower than what everybody would hope for," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Federal Reserve officials will take into account the jobs report when they meet on January 25-26. Signs of strength in the economic recovery had led to calls for the U.S. central bank to scale back its widely criticized $600bn (£387bn) government bond-purchasing program aimed at keeping interest rates low to boost demand.